UK’s largest shopping center owner collapsed into administration

Text size

Malls have been largely empty due to the coronavirus pandemic, and retail owners received just 13.8% of rent payments for the three months through June 2020.

Getty Images

The UK’s largest shopping center owner collapsed in administration on Friday after talks to extend a pause in debt repayment failed.


Intu
,

which owns and operates 17 shopping centers in the UK, including the Trafford Center in Manchester, has appointed accounting firm KPMG to oversee the process similar to the bankruptcy filing, KPMG confirmed on Friday.

The real estate company has been suspended from the London and Johannesburg stock exchanges.

Read: Intu Mall Manager May Be Latest Coronavirus Victim

The comeback story. Intu shares lost virtually all of their value and traded at just 1.8 pence ($ 0.2) on Friday, after falling steadily from 2006 highs of 1091.04 pence ($ 13.51 ).

The business was decimated by shoppers moving online, falling rents and the value of its shopping centers, leading it to post a loss of -2.02 billion pounds sterling (2.52 billion dollars) for 2019.

“Retail is a hotly contested part of the market, values ​​have fallen and rents have fallen, both have yet to go further,” Matthew Saperia, retail analyst at the brokerage firm, told Barron’s Tuesday. Peel Hunt.

Intu had said on Tuesday that he hoped to extend the rent freeze that expires at midnight on Friday, up to 15 months, and that he was in talks with his creditors, including UBS, Bank of America and


Swiss credit
.

What’s up. He announced on Friday morning that talks with lenders had resulted in “insufficient alignment” and that it was likely he would appoint directors and then confirm administration in the afternoon.

Friday’s figures from property management platform Re-Leased showed retail owners received only 13.8% of rents due for the three months through June, and only 19.8% for the previous period.

Jim Tucker, Partner at KPMG and Co-Director, said: “Intu owns many of the UK’s biggest and best-known shopping centers. The challenges affecting retailing in the UK are well known and have been exacerbated by the impact of Covid-19 and the resulting lockdown. “

Looking forward. Intu shares fell a further 54% before trading was suspended. KPMG said the shopping centers will remain open to ensure continuity of service.


FTI Council
,

who represents the providers of Intu’s revolving credit facility, was unavailable for comment.

Intu’s debt stood at £ 4.5bn at the end of 2019 and KPMG directors have said they will assess options for the group. This could include the sale of Intu’s assets or a corporate restructuring.

Read: UK mall giant Intu says it is on the verge of collapse

This could represent an opportunity for competitors such as


Landsec

and


British land

to expand their retail portfolios, but most real estate companies are rushing to exit, so it would be a bold move.


Source link

Peggy P. Gilmore