Shopping Centre Owner Intu Properties Hit by Cashflow Crisis

The owner of many of the UK’s biggest shopping centre facilities is facing an uncertain future as it tries to avoid collapsing amid a serious cashflow crisis.

Intu Properties has cited the turmoil caused by the coronavirus outbreak as an important contributing factor to circumstances that now mean it is fighting for survival.

Plans that might have seen the company raise in the region of £1.5 billion have been abandoned, with the business having posted full-year losses worth around £2 billion.

Statements given on behalf of Intu make clear that there is now a “material uncertainty” around whether the business will be able to remain operational as a going concern for much longer.

Potential routes to a more stable financial footing are being considered by bosses at the company, whose portfolio of shopping centres includes those at the Trafford Centre in Manchester and the Lakeside in Essex.

“We have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate,” outlook statements given by Intu explained.

“In the short term, fixing the balance sheet is the priority,” they said.  

The UK’s retail sector has been facing unusually tough trading conditions in recent quarters and Intu describes its own financial performance as being “evidence of the challenges in our market”.

“This has led to a higher level of administrations and CVAs and has been exacerbated by the continued weak consumer confidence from the political and economic uncertainty in the UK,” the company said.

Those issues are cited as key reasons why Intu’s like-for-like net rental income reduced by 9.1 per cent across 2019.

From the perspective of its operations in the retail property investments market, Intu’s activity was weakened notably as shopping centre transactions endured their slowest year since 1993.

Julie Palmer from the corporate insolvency experts of Begbies Traynor has said that the “rippling effect of the high street malaise has rocked Intu Properties”.

“As more high-street brands fail under the ruthless market conditions, Intu has been one of the first victims to suffer with a high number of store closures at its locations,” she said.

“The failure to proceed with an equity raise means the company’s future and the next few months will prove decisive.”