The owner of the Trafford Centre in Manchester and Lakeside shopping mall in Essex has warned it could go bust if it cannot raise further funds as it slumped to a £2 billion annual loss.
Intu Properties saw losses widen from £1.2 billion in 2018 and was forced to write down the value of its shopping centre sites and properties by £1.9 billion after recent retail sector woes.
It revealed in results there was a “material uncertainty” over its ability to continue as a going concern as it faces a cash crunch, having recently been forced to abandon plans to raise up to £1.5 billion to pay down debts.
But Intu said it had other options, such as alternative capital structures and selling off more assets.
In the short term, fixing the balance sheet is our top priorityMatthew Roberts, Intu chief executive
The group – which owns nine of the UK’s top 20 shopping centres – is also looking to secure some breathing space from its lenders, by negotiating covenant waivers.
Chief executive Matthew Roberts said: “In the short term, fixing the balance sheet is our top priority.
“We have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate,” he said.
He added: “We are focusing all our energies on moving the business forward.”
Intu pulled its planned cash call last week, blaming market uncertainty, saying investors were put off by volatility in equity markets and the retail property investment market.
It came as a major blow for the group, which had hoped the funds could help reduce the firm’s £4.5 billion debt mountain.
The firm’s full-year results showed like-for-like rental income tumbled by 9.1% in 2019 – half of which was caused by the surge in retail rescue deals and administrations.
Lats year saw soaring levels of retail company voluntary arrangements, with many struggling chains demanding lower rents and shutting stores to survive.
It saw a drop in the numbers of shoppers visiting its UK sites, with so-called footfall down 0.1% in Britain, though it edged 0.3% higher overall.
The coronavirus outbreak threatens to add to the group’s troubles, but it said footfall had so far remained broadly unchanged in the first 10 weeks of 2020.
It is “monitoring” the coronavirus crisis and potential impact on its sites if shoppers are forced to stay away.
Intu added it expects UK retail valuations to sink further in 2020, but is expecting this to start stabilising soon, while it hopes for a slowdown in like-for-like net rental income declines.