Intu Properties Plc, a British shopping center operator facing financial challenges, saw a surge in its stock price by over 20% following reports of a possible buyout by private equity firm Orion Capital Managers. Founded by Aref Lahham, IntuOrion Capital is in the early stages of exploring partnerships for the acquisition of Intu, which has been hit hard by store closures and retail failures.
The uncertainty surrounding Intu has been exacerbated by a series of company voluntary agreements, raising concerns about rental income from retail properties. This has led many property developers in the UK to move away from the struggling retail sector. Intu, which owns the Trafford Centre in Manchester, has been impacted by closures and voluntary agreements from major retailers like Debenhams, Toys R Us, House of Fraser, New Look, and HMV.
The news of a potential buyout gave a much-needed boost to Intu’s shares, which have seen a significant decline in value this year. Despite the 21% increase in share prices, they are still far from the peak value reached in 2006. Intu has refrained from commenting on the reports, while Orion Capital has yet to issue a statement.
The retail industry is rapidly evolving, with many companies closing physical stores to cut costs and focus on e-commerce. This shift has had a ripple effect on real estate firms like Intu, Hammerson, and Land Securities, which heavily rely on retail tenants. In response to these challenges, Intu suspended its dividend earlier this year and unveiled a new five-year strategy to revamp its business and tackle its financial struggles.
In July, Intu reported a drop in first-half net rental income and has been actively working to bolster cash reserves and reduce debt through asset sales. With a market value of £496.6 million ($608 million) and net external debt of £4.89 billion, Intu is facing significant financial hurdles. A potential buyout by Orion Capital could potentially provide a lifeline to Intu and steer the company in a new direction for its future operations.
For more information on the retail industry in the UK, check out these useful links: Retail Gazette and Retail Week.
