Intu pulls planned equity raising

Intu Properties has pulled a planned equity raising, saying it is now exploring other options for its capital structure, including disposals. In a stock exchange update, the company said it had spent several months talking with shareholders and potential new investors about an equity raise of between £1bn and £1.5bn. However, it added that it was cancelling the plans due to “the current uncertainty in the equity markets and retail property investment markets”, adding: “Intu has concluded it is unable to proceed with an equity raise at this point.” The company said it had received “several expressions of interest to explore alternative capital structures and asset disposals” and will now “broaden its conversations with its stakeholders with a view to discussing the range of options available”. It will also review the possibility of an equity raise at another time. Chief executive Matthew Roberts said: “We remain focused on fixing our balance sheet in the near term to ensure this business has the financial footing it needs to realise its significant potential. While it is disappointing that the extreme market conditions have prevented us from moving forward with our planned equity raise, I am pleased that a number of alternative options have presented themselves during the process, which we will now explore further.” The equity raise had long been expected, and a £440m credit facility signed last month was contingent on the company securing at least £1.3bn in new equity capital. However, intu’s share price has continued to fall, and a Hong Kong-based REIT once reported to be a cornerstone investor for a fundraising walked away from discussions shortly after the news broke of its potential involvement. The company is one of the most shorted property stocks in the UK and its shares closed on Tuesday at an all-time low of 10.63p. Alongside the information on its balance sheet strategy, intu gave investors a trading update on its position at the end of 2019. Like-for-like net rental income over the year was down by 9.1%, in line with guidance, the company said, while this year is likely to see a further decline but at a slower rate. Footfall in intu shopping centres nudged up, while occupancy rates were down two percentage points year-on-year at 95%. The value of intu’s portfolio dropped by more than a fifth over the year, and has now fallen by close to a third since the end of 2017. The company said its valuation deficit of £2bn was due to “weak sentiment rather than hard transactional evidence”. The company noted that it is currently in compliance with debt covenants, but added: “There is a risk that, depending on the performance of intu’s business and movements in valuations, it could be in breach of certain covenants at their scheduled testing date in July.” Intu has delayed the announcement of its 2019 full-year results, which had been due tomorrow, until 12 March. To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette