Hong Kong property giant set to join £1bn fundraising by shopping centres owner Intu

A Hong Kong property giant is set to join a £1billion fundraising by shopping centres owner Intu, the latter has confirmed today following speculation over the weekend.

Link Real Estate Investment Trust is in talks about joining the cash call alongside property tycoon John Whittaker’s Peel Group, which is Intu’s biggest shareholder.

Intu, which owns Manchester’s Trafford Centre and Lakeside in Essex, wants to kick off the rights issue alongside its annual results at the end of this month.

The company is being weighed down by a £4.7billion debt pile and its shares have plunged by nearly 90 per cent in the past year. 

Intu shares jumped to close 29 per cent higher at 17.32p on Monday. 

In a short statement, Intu confirmed it was ‘engaged in constructive discussions’ with shareholders, including Peel Group, Link Real Estate Investment Trust and others. 

‘The company will make further announcements in due course, as appropriate,’ it said.

‘There can be no certainty that the equity raise will be implemented nor as to the terms on which any such implementation might occur.’   

An equity raise involves issuing new shares to raise extra cash – but this tends to push the current share price down, which could upset current investors. 

Landlords have been hammered by a wave of insolvencies as tenants grapple with growing online sales and high business rates.  

Intu suffered from several big-name retailers collapsing in the past year, along with others pushing through insolvency plans known as company voluntary arrangements to reduce rents.

Successful retailers, including Hotel Chocolat and Next, have also started demanding their own rent reductions – arguing they should not be penalised with higher bills for being successful. 

Investors have been fearful of investing into retail real estate, with the struggling retail sector impacting property prices. But Intu hopes that paying down its debts will help investors flock back to the business.

Last month, Intu revealed it had sold Spain’s largest shopping centre, the Intu Puerto Venecia in Zaragoza, for £405million.

In 2018, a planned merger with rival Hammerson failed. The company, whose estate includes the Bullring in Birmingham and Bicester Village in Oxfordshire, abandoned plans to merge with Intu following a backlash from investors.

In a dramatic U-turn, Hammerson said that the proposed £3.4billion takeover of Intu was not in the best interests of shareholders’ – after it spent weeks trying to persuade them otherwise.

Then a £2.8billion takeover led by Peel Group collapsed with the suitors blaming ‘economic uncertainty and market volatility’ for a change of heart.