The shopping centres owned by Intu Properties, including its flagship mall in Trafford, will remain open despite administrators being appointed last week, but a sale of some or all the assets remains on the cards.
The London Stock Exchange-listed retail landlord fell into administration on Friday after it failed to reach an agreement with lenders to postpone debt repayments following months of financial pain.
Intu said in May it was seeking a ‘standstill’ agreement with its banks by 26 June – the second quarter date for rent due from its occupiers, many of which have struggled to pay due to low footfall and revenues during the Covid-19 lockdown. But it said in a stock exchange filing last Tuesday that it had yet to reach a deal.
Intu was already struggling financially. It had an estimated £4.5bn in debt and reported £2bn of losses for the 2019 financial year.
It appointed KPMG as administrators on Friday afternoon, placing the future of its 17 UK shopping centres, including the Trafford Centre, into doubt.
The statement from KPMG on Friday night said that the centres will continue to operate as normal despite the administration. Non-essential retailers reopened to the public on 15 June following a three-month enforced closure due to the pandemic.
KPMG explained: “Each of the shopping centres is owned individually by special purpose vehicles (‘Propcos’), which are outside any insolvency process and continue to trade as normal under the control of their directors.
“Importantly, an agreement has been reached with key stakeholders that will allow continued provision of central services to the Propcos.
“Consequently, all of the shopping centres will remain open and operational while the joint administrators assess options for the business and assets of the group.”
Some commentators have speculated that John Whittaker’s Peel Group, the local landowner that developed the Trafford Centre, sold it to Intu – then known as Capital Shopping Centres – in 2011, and still owns a 24.6% stake in Intu, may opt to buy back the 1.5m sq ft Trafford mall.
Peel Group has been contacted for comment.
Intu owns or part-owns 17 shopping centres in the UK and two in Europe. Lakeside in Essex is among the other malls in its UK portfolios. It also owns half of the Arndale Centre in Manchester with M&G Real Estate.
Frank Ofonagoro, director at business advisory firm Quantuma, said: “As part of their asset realisation strategy, the administrators will urgently seek to rank the group’s individual shopping centre portfolio from the most saleable, such as the Trafford Centre in Manchester, to those generating less interest.
“The administrators would likely prefer sale transactions where potential acquirers seek to purchase an entire shopping centre, as opposed to more piecemeal disposals of individual lease interests.”