Intu Properties is currently seeking a debt standstill agreement with its creditors.
The UK operator of the shopping center may enter into administration if no agreement is reached by Friday.
The Real Estate Investment Trust is appointing KPMG as administrator.
Intu Properties (LON: INTU) said on Tuesday that it may be forced to close some of the UK’s most popular shopping centers as the coronavirus pandemic continues to affect its performance. The Real Estate Investment Trust has approached its creditors with a request for a debt standstill agreement. Having failed to close a deal before Friday, the company said it could go into administration with KPMG acting as administrator.
The company’s shares are currently up about 5% on Tuesday. Intu Properties’ share price has so far been more than 85% down on last year at 4.7 pence per share. Learn more about financial analysis of a company.
Intu reported an annual net loss of £2 billion for the financial year 2019
Intu currently owns prominent properties in the UK and Spain, including Lakeside in Essex and Trafford Centre in Manchester. In a recent report, Intu Properties reported an annual net loss of over £2 billion and net debt of £4.69 billion in the 2019 financial year.
Intu had warned in March that COVID-19 would have a massive impact on the company’s financial performance as without sufficient funding its future would be at risk in the months ahead. At the time, the British government had not yet announced a nationwide lockdown to minimize the rapid spread of the novel flu-like virus, which has so far infected over 300,000 people in the UK and caused more than 42,500 deaths.
As debt relief will soon expire, Intu is currently negotiating with its creditors for debt relief. According to the London-based company, the talks began in May with prominent points of discussion, including the duration of the standstill agreement and the extent to which its creditors will contribute to future debt collection and financing.
Intuitively denied Hammerson’s offer of £3.4 billion in 2018
In an earlier report in June, Sky News revealed that KPMG was looking for £12 million in new funding to save some of Intu’s best-known shopping centers from closure. Its competitor Hammerson had shown interest in buying Intu in 2018 for £3.4 billion.
According to Consultancy CBRE, the ongoing health crisis has impacted the value of retail property in recent months, leading to an increase in UK shopping center yields from 4.5% in 2016 to 6.5%. Yields on first-class shopping streets, by contrast, rose from 4% in 2018 to 5.75%.
At the time of writing, Intu Properties is valued at £62.39 million sterling.