Intu, the company behind well-known shopping destinations like Trafford Centre and Lakeside, has hit a roadblock in its attempt to raise capital from investors in order to reduce its debt. Link Real Estate Investment Trust, a Hong Kong-based investor and the largest real estate investment trust in Asia, has decided to withdraw its participation from Intu’s recapitalization plan. This unexpected move comes just a day after Link’s involvement was announced, which initially brought optimism among investors.

The news of Link’s withdrawal caused Intu’s shares to plummet by 31%, reaching a record low of 11p. Link explained its decision by stating that while it remains interested in opportunities in the UK, negotiations with Intu failed to yield an agreement. As a result, Intu’s market value has now dropped to £163m, reflecting the company’s struggle with mounting debt over the past five years. Intu aims to raise at least £1bn through the proposed equity raise as a means to alleviate its £4.7bn debt pile.

Despite this setback, Peel Group, which holds a majority stake of 52% in Intu, continues discussions with other investors to secure the terms of the cash call. Intu itself confirmed that it is actively engaged with its shareholders and potential new investors regarding the proposed equity raise. The company has encountered numerous challenges in recent years, including the cancellation of a £3.4bn buyout by property giant Hammerson in 2018 due to market deterioration. Additionally, the growth of online spending has led to retail tenants seeking rent reductions or closing stores.

To address its financial struggles, Intu has been strategically selling assets to raise funds. It has already divested two of its three malls in Spain. The absence of Link as an investor in the equity raise has added further uncertainty to Intu’s financial future as it works toward finding solutions to its mounting debt burden. Nevertheless, ongoing discussions with other potential investors and shareholders offer a glimmer of hope that a resolution to Intu’s financial challenges may still be found.

Useful links:
1. Intu Group – Official website of Intu, providing information about its properties, investor relations, and news updates.
2. Link Real Estate Investment Trust – Official website of Link, offering insights into its operations, portfolio, and investment strategy.