The owner of some of the UK’s biggest shopping centres has abandoned an emergency fund raising.
Intu was looking to raise up to £1.5bn from shareholders to pay down a massive debt pile and secure its future.
But the owner of Manchester’s Trafford Centre and Lakeside, in Essex, said “extreme market conditions” deterred investors from giving fresh cash.
The news sent Intu shares tumbling 43% at the start of trading, but the price later recovered to stand about 20% off.
The collapse and contraction of High Street retailers has left landlords such as Intu struggling to fill vacant space. At the same time Intu has run up debts of about £5bn.
Intu boss Matthew Roberts said in a statement on Wednesday: “It is disappointing that the extreme market conditions have prevented us from moving forward with our planned equity raise.”
However, Mr Roberts said “a number of alternative options” had been presented during the process and the company will explore these further. These options include selling off assets and what Intu called “alternative capital structures”, likely to be specific investments in the company and individual shopping centres.
The first warning sign that Intu might struggle to raise money came last month when Link Real Estate Investment Trust, based in Hong Kong, announced that it was not interested in the fund raising. Intu had named it as one of the investors it was in discussions with just a day earlier.
The Financial Times reported at the time that Link was “quite surprised” to have been named.
On Wednesday, Mr 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.”
In a trading update alongside news of the cash-call problems, Intu revealed that its UK shopping centres had weathered a 2.5% drop in footfall across the sector.
It kept guidance unchanged for 2020, saying results would decline but at a slower rate than last year when like-for-like net rental income fell 9.1%.
Mr Roberts said: “We will face further challenges in what has been an extraordinary few months for Intu and the wider sector, but I am confident that we will face these head-on and emerge a leaner, fitter and more focused business.”