Intu mall manager could be latest coronavirus victim as he appoints KPMG for potential administration

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An Intu shopping center is empty due to the coronavirus pandemic while non-essential retail stores have been closed.

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Real estate investment company

Intu Properties,
which owns 14 shopping centers in the UK, has warned it could enter the equivalent of bankruptcy if talks to delay payments to its lenders are unsuccessful by Friday.

The company, which has Europe’s largest indoor shopping centre, has appointed accountant KPMG to plan for a possible administration, it said on Tuesday.

The story back. Intu has seen its value fall more than 99% from highs in 2010 as buyers move online, driving down rents and the value of its malls. Intu lost £2.02 billion ($2.52 billion) last year.

Read:Intu Stock slips as UK shopping center owner plans £1bn cash call

“Retail is a hotly contested part of the market, values ​​have fallen and rents have fallen, both still have a way to go,” said Matthew Saperia, retail analyst at stockbroker Peel. Hunt at Barron’s.

“Intu was operating with a less than ideal capital structure and share register, and with structural changes in the retail market, they came together to create a perfect storm and destroy significant net worth,” he said. -he declares.

In May, Intu said it waived its debt obligations through June 26 due to the impact of coronavirus closures on rent collection at its malls.

What’s new. Intu’s announcement on Tuesday said it was still discussing the terms of a freeze on its debt payments, including a possible debt-for-equity swap, which could hurt existing shareholders, including real estate funds, by diluting the shares.

The company said it would likely fall into administration if it failed to agree on a rent moratorium.

Looking forward to. Intu’s share price has crashed and any recovery will be heavily dependent on consumer confidence as the UK and countries around the world emerge from lockdown.

Read:REITs are far from the lows. Now is the time to be selective.

The numbers so far suggest a half-hearted return to stores, and with the coronavirus serving as a catalyst for the adoption of online shopping, it’s likely brick-and-mortar retailers could face further challenges, driving down further stock prices of Intu and others.

Intu shares traded steadily at 4.65 pence on Tuesday.

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Peggy P. Gilmore