The owner of the vast Braehead shopping and leisure complex on the outskirts of Glasgow is to tap shareholders for a cash injection as it looks to pay down its debts.
Intu Properties, which is one of Britain’s biggest shopping centre owners, said the money would be raised next month ahead of the company’s results.
The firm had already warned that its £5 billion debt pile was too high, triggering a range of actions including selling off some assets.
Releasing a market update, the group told investors: “Intu properties continues to make progress in its strategy to fix the balance sheet.
“Consistent with previous announcements, this now includes targeting an equity raise alongside its full-year results at the end of February.
“The company is currently engaged in constructive discussions with both shareholders and potential new investors on the proposed equity raise.”
An equity raise involves issuing new shares to raise extra cash, but this tends to push the share price down, which could upset current investors.
Intu’s chief executive, Matthew Roberts, said: “We are making good progress with fixing the balance sheet, our number one priority, and are confident we have the right strategy in place to enable us to prosper as we see continued polarisation between the best destinations and the rest.”
The group’s other major malls include Lakeside in Essex and Manchester’s Trafford Centre.
Roberts noted that footfall to Intu’s UK centres was flat during the Christmas period compared with a year earlier – which was ahead of falls across the market more broadly.
Some 95 per cent of space was occupied by tenants, with 97 per cent of rent collected for the first quarter of 2020, the group added.
Roberts said: “We have delivered a robust operational performance for 2019 finishing with a busy Christmas trading period. Total footfall in 2019 was 0.3 per cent ahead of 2018, flat in the UK which significantly outperformed the Springboard footfall monitor for shopping centres.”
Last month, in order to trim the debt levels, Intu revealed it had sold Spain’s largest shopping centre – the Intu Puerto Venecia in Zaragoza – for €475.3 million (£405m). The group banked €237.7m from the deal as a part owner.
The amount Intu hopes to raise from shareholders remains unclear, although weekend press reports put the figure at up to £1bn.
Shareholder and billionaire businessman John Whittaker, who has a 27 per cent stake, is said to be in favour of the plan.
Commercial property owners, particularly in retail, have suffered in recent years as several big name brands either went into administration or pushed through an insolvency process known as a company voluntary arrangement (CVA) to reduce rents.
In November last year, Intu already warned that rental income in 2019 is likely to fall by 9 per cent, with more than half the decline coming from Arcadia and Monsoon using CVAs. Bosses said rent in 2020 is also likely to drop, but at a slower rate than 2019, and added that the political and economic uncertainty is putting off current tenants from signing up to new lettings.