(Alliance News) - intu Properties PLC on Wednesday said it has not been able to launch a fundraise amid uncertainty "equity markets and retail property investment markets", heaping even more pressure on the shopping centre owner.
Shares in the company were 25% lower at 8.01 pence each in London on Wednesday morning. In Johannesburg, they shed 29% to ZAR1.50 each.
So far this year, Intu shares in London have lost about 77%.
The retail property owner said it has been in talks with new and existing investors for "several months" about the possibility of an equity raise between GBP1 billion and GBP1.5 billion.
intu added: "While a number of intu's shareholders and potential new investors indicated their support for an equity raise, the board believes the current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business, and intu was therefore unable to reach the target quantum at the current time."
In February, the company reported that Link Real Estate Investment Trust, an Asian investor, decided against taking part in an equity raise. The Hong Kong-listed firm was part of the negotiations to raise cash but informed the firm that it no longer intended to "participate in a recapitalisation of the company", intu explained.
intu on Wednesday said: "However, during this process, intu received several expressions of interest to explore alternative capital structures and asset disposals.
"Accordingly, intu will continue and broaden its conversations with its stakeholders with a view to discussing the range of options available to the company to demonstrate the equity value of the business and to utilise its assets to provide further liquidity. These include alternative capital structures and solutions and further disposals. intu will also continue to keep under review the feasibility of an equity raise."
Turning to its trading, Intu said that, outside of challenges caused by tenants pursuing company voluntary agreements, its performance in 2019 was "robust". A CVA is an insolvency arrangement used to by struggling retailers to reduce rent bills.
In November, said it was hurt by CVAs with UK-based Monsoon Accessorize and Topshop-owner Arcadia Group Ltd.
In 2019, footfall at intu centres rose by 0.3%, with footfall in the UK alone flat year-on-year.
Net rental income in 2019 was in line with guidance, down by 9.1%, with occupancy "stable" at 95%, but down from 97% at the end of 2018.
The company added: "intu's underlying rental income remains resilient and over the past five years intu has delivered underlying rental increases on new lettings and rent reviews, despite ongoing pressure from CVAs and administrations, demonstrating continued occupier demand for intu's space.
"With the continued evolution of the retail market, the company has worked closely with an external consultancy firm, with particular expertise in the retail sector, to model the potential impact of current market forces on the sustainability of rent levels of its individual tenant customers. While there may be rental pressure over the short term, intu is confident in the quality of its asset base and the long-term attractiveness of its space to retailers."
Footfall in the first eight weeks of 2020 was 0.9% higher year-on-year, intu noted.
Chief Executive Matthew Roberts said: "We remain focused on fixing our balance sheet in the near term to ensure this business has the financial footing it needs to realise its significant potential. While it is disappointing that the extreme market conditions have prevented us from moving forward with our planned equity raise, I am pleased that a number of alternative options have presented themselves during the process which we will now explore further."
By Eric Cunha; ericcunha@alliancenews.com
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