INTU, the UK’s largest shopping centres group, tapped investors for around £280m yesterday to help fund a £251m deal to buy Midsummer Place shopping centre in Milton Keynes.
The FTSE 100 company, formerly known as Capital Shopping Centres, placed 86m new ordinary shares at 325p to fund the deal, representing 9.9 per cent of the company’s share capital.
Shares fell 2.6 per cent yesterday on news of the fourth equity placing since 2009 and a mixed reaction to its 2012 results, which showed flat earnings last year.
It reported a 2.7 per cent fall in net rental income last year after shouldering more than £13m costs after tenants such as Game and La Senza fell into administration.
Despite pressures on the retail sector, Intu said its occupancy level remained relatively stable, dropping from 97 per cent to 96 per cent during the course of the year.
Tenants in administration count for four per cent of its rent roll, although Intu said three per cent of those sites were continuing to trade.
The net asset value of the company’s real estate was up one pence at 392p per share at the end of December from a year earlier.
Investec analysts said: “With falling earnings, net asset value virtually unchanged and a stagnant dividend, we find it very surprising that Intu is raising capital to buy an expensive asset with limited growth potential.”
Last month Intu announced it was changing its name from Capital Shopping Centres as part of a £25m revamp that included renaming its malls and boosting its online presence.
BANK OF AMERICA MERRILL LYNCH
BANK of America Merrill Lynch (BofA) acted as joint bookrunners and corporate brokers in connection with the placing, in a team that included Simon Mackenzie-Smith, chairman of UK & Ireland corporate & investment banking, George Close-Brooks, managing director in the bank’s investment banking division and fellow managing director Ed Peel.
Close-Brooks, an expert in the real estate, consumer and retail sectors, has been key in BofA’s longstanding relationship with Intu, including advising it on the successful defence against Simon Property Group’s hostile £5.4bn bid in 2011 and its £300m convertible bond issue last September. He was also sole adviser on the sale of Intu – then known as Capital Shopping Centres’ – US real estate assets into $600m (£395.8m) joint venture with US developer Equity One also in 2011. Close-Brooks joined the firm in 2007, having previously worked at UBS for eight years.
UBS also acted as joint bookrunners and corporate broker, with UK vice-chairman Hew Glyn Davies and real estate head Fergus Horrobin representing the bank. HSBC also advised as joint bookrunner, with a team led by John Herbert, global head of real estate and Simon Alexander, co-head of corporate broking.