Intu secures investment for Derby shopping centre to reduce debts

Under-pressure shopping centre operator Intu has sold a 50% stake in its Derby shopping centre to investment firm Cale Street for £186m.

The group, which also owns the Trafford Centre, has had a challenging year amid a retail crisis and failed merger talks.

The deal will see the Kuwait-backed retail investor enter a joint venture with Intu for the site, which generated net rental income of £25.2m last year.

Intu Derby is in the centre of the city and has an annual footfall of 22m.

It was redeveloped and extended in 2007 and has more than 200 units, with retailers including M&S, Debenhams, Next and H&M. Intu will continue to manage the site.

The deal forms part of the group’s strategy to reduce debt through disposals and part disposals. The company said in its latest annual report that it had net external debt of £4.87bn.

Intu’s annual results for 2018 showed it swung to a £1.17bn loss and property valuations fell, amid a difficult environment which has seen a number of retailers collapse and stores closed over the past year.

Bullring owner Hammerson walked away from a £3.4bn takeover bid for the company last April.

The company was later the subject of another takeover bid led by Peel Group, valuing it at £2.8bn. This too ended in disappointment as the bidders abandoned the deal in November.

Matthew Roberts, chief executive designate, said: “We are pleased to announce our new partnership with Cale Street and look forward to working with them at Intu Derby.

“In what is a challenging investment market, this innovative transaction, which is in line with the December 2018 valuation, shows Intu is delivering on its strategy of reducing loan to value through disposals and part-disposals.

“On a proforma basis, we expect the impact of this transaction to reduce our loan to value by around 1%.”