Intu prepares €1b UK portfolio sale to stave off collapse

UK listed retail specialist Intu Properties is close to appointing agent CBRE to market a portfolio of three shopping centres in the UK in an attempt to raise liquidity and stave off collapse.

Intu, the owner of UK shopping malls including the Trafford Centre in Manchester, is seeking over £1 bn (€1 bn) for intu Merry Hill in Birmingham, intu Milton Keynes and its 50% stake of St David’s in Cardiff, which it owns alongside Land Securities.

Merry Hill is the company’s fourth largest asset and was last valued at £588 mln, Milton Keynes is valued at £212.5 mln and its half of St David’s at £230 mln (per year-end 2019).
 
CBRE and Intu declined to comment.

The sale was first reported by UK publication React News.

Earlier this month the debt-laden retail giant warned that it could go bust if it is unable to raise further liquidity. Intu posted a loss of £2 bn in 2019, up from £1.17 bn the year before. The figure was mostly a result of write-downs in Intu’s shopping centre portfolio which shed 23% of its value or nearly £2 bn over 2019. Intu’s portfolio is currently valued at £6.6 bn, down 33% from a peak in December 2017.

Top priority
With a debt to assets ratio reaching 68%, the company flagged a ‘material uncertainty in relation to Intu’s ability to continue as a going concern’. However, it said it still had options to raise liquidity, including selling off more assets, refinancing its £4.5 bn debt and negotiating with its lenders.

‘Fixing the balance sheet is our top priority,’ said Intu’s chief executive officer Matthew Roberts in a statement.

Although the company believes it still has a range of options including alternative capital structures and asset disposals to provide liquidity, analysts warn the company is running out of time particularly considering the expected impact from the coronavirus epidemic.

‘Intu’s management believe valuations in 2020 “should start to stabilise”. I do not share their optimism, especially given the great unknown of Covid-19,’ comments Colm Lauder, real estate analyst at Goodbody. ‘The main concern at present will not be the footfall impact of online sales, but the impact from Covid-19.

The company owns 20 shopping centres in the UK and Spain. It sold almost £500 mln of assets last year and recently offloaded Intu Asturias in the Spanish town of Oviedo for €290 mln.

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