intu in talks with banks as tenants withhold rent


intu in talks with banks as tenants withhold rent

Published Date: 2020-03-27 | Source: Stephen Gunnion | Author: Stephen Gunnion

intu in talks with banks as tenants withhold rent

The shopping centre owner received less than a third of rent owed to it by the due date this week.

intu Properties says it's engaging with its bankers and may try and tap into the UK government's support funding after the majority of its tenants didn't pay their rent in time.

The beleaguered shopping centre owner said it was in discussions with its customers after only receiving 29% of the rent it's owed for the second quarter by the due date on 25 March. Last year, it received 77% of rent owing on time. It said all its centres in the UK and Spain were operating on a semi-closed basis, with only essential stores such as supermarkets, pharmacies and banks remaining open in line with government advice in both countries.

The lockdown in the UK and Spain comes at a difficult time for intu after it reported a £2 billion loss for its 2019 financial year and warned its ability to continue as a going concern may be in jeopardy unless it could renegotiate debt covenants with its lenders and raise capital. It blamed the loss on a £1.98 billion write-down of the value of its shopping centres following an independent valuation of the portfolio.

As at 24 March, it had available cash and facilities of £184 million at the corporate level. It said the impact of the Covid-19 virus in Europe was delaying some of the regulatory approvals it still needs for the disposal of the intu Puerto Venecia shopping centre and now only expects to receive the the proceeds of £95 million by the middle of May at the earliest.

intu said it had significantly reduced capital expenditure for the foreseeable future and was also cutting back on head office costs to maintain additional cash for the business. It may try to access the government's £330 billion support package, while other measures including the suspension of business rates, employee cost support and tax payment deferrals were also expected to have a positive impact.

Earlier this month, intu cancelled a proposed rights issue to raise £1 billion to £1.5 billion capital due to a lack of support from potential investors. However, it said it still had a range of options including an alternative capital structure and more asset disposals.

Due to the ongoing uncertainty around Covid-19, intu said it was no longer able to provide guidance for the year. It would continue to assess all strategic alternatives for the business.

Its shares rose 14% to 84c yesterday.

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