Intu has failed to raise the £1.5bn needed to refresh its credit ahead of publishing its full-year financial results next week, but said it remained hopeful of fixing its balance sheet.
In a trading update issued this morning, Intu blamed “current uncertainty in the equity markets and retail property investment markets” for failing to raise the £1.5bn it needed to refresh its revolving credit facility with its lenders.
Intu said that during the equity raise process it received “several expressions of interest” in possible alternative capital structures and the sale of sites.
As a result, the landlord said it would “broaden its conversations with its stakeholders with a view to discussing the range of options available to demonstrate the equity value of the business and to utilise its assets to provide further liquidity”.
Rental income slumps
The landlord also provided a trading update to the City ahead of its full-year results presentation which is due next week.
Like-for-like net rental income for the year was down 9.1%, while unit occupancy also slipped over the year down two percentage points to 95% due to tenant closures through administrations or CVAs.
An independent valuation of Intu’s portfolio at December 31, 2019, found it delivered a £2bn deficit for the year, a 22% decrease for the year and down 33% from its peak valuation in December 2017.
Intu said weak sentiment rather than “hard transactional evidence” was the key driver behind the valuation deficit.
The landlord warned that, depending on the performance of its businesses and movements in valuation, it could find itself in “breach of certain covenants” in July 2020.
The shopping centre owner did flag that footfall across its portfolio increased 0.3% during the period and that in the first eight weeks of 2020 footfall had jumped 0.9% year-on-year.
Intu chief executive Matthew Roberts said: “We remain focused on fixing our balance sheet in the near term to ensure this business has the financial footing it needs to realise its significant potential. While it is disappointing that the extreme market conditions have prevented us from moving forward with our planned equity raise, I am pleased that a number of alternative options have presented themselves during the process which we will now explore further.
“We will face further challenges in what has been an extraordinary few months for Intu and the wider sector, but I am confident that we will face these head-on and emerge a leaner, fitter and more focused business.”
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