Shopping centre investor Intu (INTU) and indeed the rest of the REIT (real estate investment trust) space is in demand after news of a possible approach after the market close yesterday from a consortium of investors.
Intu, whose shares had been under pressure for some time and which saw a merger with Hammerson (HMSO) collapse back in April, surges 28% to 190.2p.
Following on its coat tails are Hammerson, up 3.1% to 441.4p, British Land (BLND), gaining 1.3% to 584.2p and Land Securities (LAND), ahead by 1.5% at 852.6p.
Led by Intu deputy chairman John Whittaker’s Peel Group, which already owns nearly 30% of Intu, the other parties involved in the mooted deal (which may or may not result in a cash bid) are Canadian real estate investor Brookfield and Saudi Arabia’s Olayan.
They have until 5pm on 1 November to make an offer.
WHAT SHOULD INVESTORS DO?
Liberum’s real estate team reckon investors should bite their hands off in the event of a cash bid being tabled.
They comment: ‘Aside from any view on the long-term, structural outlook for retail property, should a bid materialise we believe investors should seriously consider it, given the above average financial leverage of Intu which limits its ability to self-fund its growth aspiration and maintenance capex requirement.’
AJ Bell investment director Russ Mould says: ‘Intu is struggling thanks to the structural changes in the retail market, where more and more sales are moving online, and its heavy debts.
‘Already jilted at the altar by Hammerson in April, shareholders will likely be hoping there is no repeat this time around.
‘The news helps lift a depressed REIT sector with the likes of Land Securities, British Land and Intu's main lookalike on the London market, Hammerson, all enjoying share price gains.
‘Whether these can be sustained may depend on updates due from British Land and Land Securities next month.'
