Intu short bets set to pay off for hedge funds as debt-laden retail operator calls in administrators

Intu Potteries

A number of hedge fund short-sellers look set to gain from troubled shopping centre operator Intu Properties’ fall from grace, with shares in the London-based real estate investment trust sliding again on Friday (26 June) following news that the debt-laden firm has entered administration.

Toscafund Asset Management, the long-running equity-focused hedge fund firm led by ex-Tiger Management star Martin Hughes, and Kite Lake Capital Management, the hard catalyst event driven fund, are two well-known UK hedge funds that have made bearish bets against the troubled retail operator in recent weeks.

Citadel and Polar Capital are two other high-profile hedge funds that also held positions against Intu during the second quarter of this year.

Intu Properties’ share price has plummeted in 2020, from around GBP34 at the start of January to a low of GBP1.20 at one point on Friday morning.

The operator has a major foothold in the UK’s shopping centre sector, its portfolio including well-known malls such as Gateshead’s Metrocentre, Lakeside in Essex, Braehead near Glasgow, and the Manchester Arndale centre.

But retail-focused businesses have been hit particularly hard by the coronavirus crisis, with footfall flatlining amid the lockdown. At the same time, Intu has continued to grapple with some GBP4.5 billion (USD5.6 billion) worth of debt.

The company said it is likely to appoint administrators after talks with creditors ground to a halt this week.