Orion Capital Managers has upped its stake in troubled shopping centre REIT, Intu, in what could potentially be a sign of a future take-over.
Opportunistic investor Orion’s stake in Intu has doubled this month, climbing to 9.2%. The holding is now worth €118.7 mln – which is less than Orion paid for the shares.
The value of Intu’s shares have dropped by more 60% in the past 12 months, as the effects of the crisis in retail have hit tenants’ bottom lines. Shares in the shopping centre operator are currently trading at a 69% discount to NAV (net asset value).
Last month, Intu warned it expects a big drop in rental income as a result of high-street businesses struggling to compete with online shopping, among other factors.
However, Orion appears to not share the widespread pessimism and causes for optimism can be found, indicating Intu is currently undervalued. In April, Intu sold a 50% stake in its Derby shopping centre to Cale Street for €208.3 mln - a price in line with its December 2018 valuation.
Two take-over bids for Intu have failed in the past 18 months. Last year, a consortium of Brookfield Property Group, Peel Group and Olayan Group walked away from a bid because of uncertainty over the future of UK retail.