Yahoo Finance How Sports Direct boss Mike Ashley could disrupt hedge fund's bet on Intu
Mike Ashley and a prominent Brexiteer hedge fund manager could be at odds over the future of a company that owns some of Britain’s most famous commercial real estate.
Intu Properties is a real estate investment trust that owns or part-owns Manchester Trafford and Arndale shopping centres, and the Lakeside shopping destination, and has been enduring a rough time due to the decline of bricks-and-mortar retail as well as the economic uncertainty brought about by Brexit.
Crispin Odey, famous for his profit in the aftermath of the Brexit vote and his support for Michael Gove as the next prime minister, holds a short position in Intu. One of its biggest clients is House of Fraser, which was taken over by Newcastle United owner Mike Ashley, who also owns Sports Direct and has a significant stake in Debenhams. He is currently attempting to force through cuts in his rental obligations with Intu. Last week, Intu refused to give rent reductions to four of his House of Fraser branches.
The Press Association reports that the retail billionaire has bought a long leasehold on the former BHS site in Derby from Intu as he threatens to withdraw 17 stores from the retail landlord’s centres.
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If Ashley is able to come to an agreement with Intu over the future of his rental needs, then that would be welcome respite for the landlord after they saw a proposed £2.8bn ($3.57bn) takeover collapse on Thursday, wiping 40% off the value of the share price. Ashley estimates that his boycott would cost Intu £25m, while sources close to the property company believe that it is nearer to £4m.
Odey increased his short position in Intu to 1.88% in figures published on 23 November, days before the takeover backed by the Canadian private equity firm Brookfield failed. Should Odey continue to bet against the future of Intu, then any agreement between Ashley and the company could cause him to lose out depending on how the market sees any possible resolution.
Hedge fund manager Odey was prominent in Brexit celebrations, saying after the result that: “I feel fantastic,” as he was rumoured to have made £220m by shorting the pound and investing in gold before the vote. He said of his success: “I think I may be the winner.” He also built a house for his 20 chickens, costing £150,000, called Cluckingham Palace. Odey continues to hold short positions on UK government debt and other British companies in anticipation of a further economic downturn.
