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INTU PROPERTIES PLC - Intu and Cale Street Investments Announce Completion Of Joint Venture For Intu Derby

Release Date: 09/07/2019 08:00
Code(s): ITU     PDF:  
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Intu and Cale Street Investments Announce Completion Of Joint Venture For Intu Derby

(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code:      ITU

9 JULY 2019


intu properties plc (‘intu’) and Cale Street Investments LP (‘Cale Street’), an investment firm
backed by the Kuwait Investment Office, the London office of the Kuwait Investment
Authority, announced on 18 April 2019 that they were forming a joint venture that will own
the intu Derby shopping centre.
The closing of the transaction was subject to completing a senior debt financing of the centre
and certain other completion conditions. These conditions have now been met and the
transaction has completed.
The consideration payable to intu by Cale Street was calculated by reference to the
December 2018 book value of the centre of £372.5 million (100 per cent). Senior debt
finance of £150 million was raised in the joint venture with Deutsche Bank. The
consideration amounted to £109 million, after working capital adjustments.
The debt raised in the joint venture along with the consideration have been used by intu to
repay debt, including £210 million of the SGS term loan which matures in 2021, leaving £142
million of the SGS term loan outstanding. This is in line with intu’s stated strategy to reduce
its debt and focusing on the near-term refinancing activity. On a pro-forma basis, the
transaction reduces debt to assets ratio by around one per cent.
intu will continue to manage the centre on behalf of the joint venture and receive asset
management and brand licence fees for this, further enhancing intu’s return from the
As previously stated, this preferred equity transaction includes a prioritisation waterfall for
distributions to the joint venture partners. This gives Cale Street priority on income and
capital distributions from the joint venture, capped at a high single-digit total return per
annum. While not guaranteed, this protects Cale Street to some extent on the downside but
allows intu to benefit on the upside. Under the terms of the joint venture, distributions remain
a decision for the joint venture board, allowing intu and Cale Street to defer dividends to
retain cash in the joint venture if deemed required for capital investment or other uses.

Matthew Roberts, chief executive of intu, commented:
“We are pleased to complete this innovative joint venture transaction in what is a challenging
investment market in the UK. Cale Street’s equity represents a flexible and cheaper source
of capital than intu’s own equity and other private equity financing sources considering
investing in UK shopping centres today. This reduced cost is achieved in exchange for a
priority of distributions to Cale Street.
Whilst the transaction is earnings dilutive, the part-disposal of intu Derby is evidence of our
strategy to reduce debt though disposals and part-disposals both in the UK and Spain and
the transaction crystallises value significantly above the look-through value of intu Derby
implied by the current share price.”

 intu properties plc
 Matthew Roberts          Chief Executive                           +44 (0)20 7960 1353
 Dushyant Sangar          Chief Investment Officer                  +44 (0)20 7960 1290
 Adrian Croft             Head of Investor Relations                +44 (0)20 7960 1212

JSE Sponsor
Merrill Lynch South Africa (Pty) Limited

About intu
intu owns and manages some of the best shopping centres, in some of the strongest
locations, in the UK and Spain.
Our UK portfolio is made up of 17 centres, including eight of the top-20, and in Spain we own
three of the country’s top-10 centres, with advanced plans to build a fourth.
We are passionate about creating compelling experiences, in centre and online, that make
our customers smile and help our retailers flourish.
We attract around 400 million customer visits and 26 million website visits a year offering a
multichannel approach that truly supports retail strategies.
Our strategic focus on prime, high-footfall flagship destinations, combined with the strength
and popularity of our brand, means that intu offers enhanced footfall, dwell time and loyalty.
This helps our tenants flourish, driving occupancy and income growth.
We are committed to our local communities, with our centres supporting nearly 130,000 jobs
(representing about 3 per cent of the total UK retail workforce), and to operating with
environmental responsibility. We have already met or exceeded a significant number of our
2020 environmental targets.

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