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Coronavirus: Intu warns of covenants breach as rents collapse

Shopping centre owner Intu has warned of a breach of its upcoming debt covenants after it received less than one-third of UK quarterly rent payments that were due yesterday. 

Intu received just 29% of rent due yesterday across its UK centres. It received 77% of rent for the same quarter last year. 

The landlord, which owns centres including Manchester’s Trafford Centre and Lakeside in Essex, said: “The impact of reduced rents received is expected to require us to seek covenant waivers, and we are in constructive discussions with the relevant lenders.” 

In March, Intu failed to raise between  £1bn and £1.5bn of new equity to fix its balance sheet, increasing its risk of breaching certain debt covenants in July 2020. The landlord reported a £2bn loss for the year to 31 December 2019, and wrote down the value of its shopping centre portfolio by £1.98bn. 

Intu said it may look to access the government’s £330bn support package for businesses affected by the coronavirus epidemic, alongside considering ”all strategic alternatives”. 

All of the landlord’s centres in the UK and Spain are currently operating on a semi-closed basis, as only essential stores such as supermarkets, pharmacies and banks remain open. 

Intu announced it has reduced capital expenditure “for the foreseeable future”, and is cutting back on head office costs. 

It also announced this week that it will slash service charges for tenants by 22% in the second half of 2020. 

 

 

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