Intu – a look back at what went wrong for the shopping centre giant

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June 26 is a painful day for many people linked to Intu, the shopping centres giant that has gone into administration.

For management, months of trying to cut debts and keep its malls busy has proved difficult, and today will feel bleak. Then there are staff: not just at Intu, but the employees who work for the tenants based in the firm’s centres. It will be tense as they wait to hear what happens next.

The collapse of Intu, which has been struggling with a near £4.5 billion debt pile, follows a number of difficult years for the Lakeside landlord.


It is not just a complex loans structure the company has had to grapple with. There were plunges in retail property values, tenants seeking rent cuts, and other problems.

Here are some of the other headaches Intu’s management have faced in recent years.

Takeover or no takeover

Back in December 2017 the firm’s larger rival Hammerson unveiled plans for a tie-up with Intu to create a mega-retail property company to take on online competition.

But around four months later Hammerson ditched the £3.4 billion takeover and said at the time its board thought the all-share takeover of was “no longer in the best interests of shareholders”.

Later in 2018 came more talks with another suitor for a £2.9 billion takeover. However the consortium led by Intu’s deputy chairman John Whittaker decided it would not be making an offer “given the uncertainty around current macroeconomic conditions and the potential near-term volatility across markets”.

CVA pains

Matthew Roberts,previously finance chief at Intu, took the top job in April 2019. At that point he was already having to deal with a number of restructures from tenants.

Between January and May last year the malls firm was hit by a higher-than-expected number of retailers, including Paperchase and restaurants chain Giraffe, using company voluntary arrangements (CVAs), to axe stores or seek rent cuts. More CVAs followed in the same year, impacting the landlord’s rental income.

Political uncertainty

In November Roberts warned that in the third quarter there was slower letting activity “as some customers delay decisions due to continued political and economic uncertainty”.

At this point some would-be tenants would have still be looking at how Brexit and the December 2019 election result may impact their business.

No new funds

In March Intu failed in its bid to raise an emergency £1.5 billion from investors. It had been hoping to raise between £1 and £1.5 billion.

Intu said at the time its board “believes the current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business”.

Covid-19

Intu, live rivals, has been hurt by the coronavirus crisis. Scores of retailers and restaurant owners that occupy Intu malls had to close sites in March for the lockdown. This impacted the ability of some firms to pay rent.

‘Non-essential’ retailers have only started reopening since June 15, and hospitality businesses will be able to reopen from July 4.

June rent quarter day

A source said Intu received just over 10% of the rent it was due from retailers on the quarter payment day this week.

Attempts to pay down debts have not been made any easier by such a number of headwinds Intu also had to deal with.

Source Article from https://www.standard.co.uk/business/intu-what-went-wrong-a4481486.html

June 27, 2020 |
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