Intu completes sale of Derby mall stake

Intu has sold 50% of its Derby mall as part of a wider mission to offload assets to reduce debt. Investment firm Cale Street, which is backed by London-based Kuwait Investment Office, will form a joint venture with intu to run the East Midlands shopping centre. Cale Street paid £109m to intu for the stake, after working capital adjustments. This was calculated by reference to the December 2018 book value of the centre of £372.5m. Matthew Roberts, chief executive of intu, said: “While the transaction is earnings-dilutive, the part-disposal of intu Derby is evidence of our strategy to reduce debt though disposals and part-disposals both in the UK and Spain and the transaction crystallises value significantly above the look-through value of intu Derby implied by the current share price.” The deal was first revealed in April, but the closing of the transaction was subject to the completion of a senior debt financing of the centre and other conditions. These have all now been met. Senior debt finance of £150m was raised for the joint venture from Deutsche Bank. Intu will continue to manage the centre on behalf of the joint venture and receive asset management and brand licence fees for this. The preferred equity transaction includes a prioritisation waterfall for distributions to the joint venture partners. This gives Cale Street priority on income and capital distributions from the joint venture, capped at a high single-digit total return per annum. The firm said: “While not guaranteed, [the waterfall] protects Cale Street to some extent on the downside but allows intu to benefit on the upside. Under the terms of the joint venture, distributions remain a decision for the joint venture board, allowing intu and Cale Street to defer dividends to retain cash in the joint venture if deemed required for capital investment or other uses.” CBRE advised intu while Knight Frank acted for Cale Street.   To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette