The future of Intu shopping centres, one of the UK’s biggest retail operators, looks even shakier after some of its biggest retail tenants refuse to pay rents.
Intu, which owns the Manchester Trafford Centre, Intu Milton Keynes and the Lakeside mall in Essex, among others, says it has received only around 30 per cent of the rent due this month. Last year, even amid retail collapses, the figure was more than 75 per cent.
Earlier this month Intu warned it would need to secure additional funding, after losses for 2019 reached £2bn, wiping more than a fifth off the value of its estate. Waves of CMAs and administrations left store fronts empty, pushing like-for-like retail income down 9.1 per cent.
Now it is struggling to recoup losses as retailers such as Primark begin to revolt due to the impact of the coronavirus. The fast fashion retailer is withholding a total of £33m from its landlords, after being forced to close down shops as part of the UK government’s clamp down on non-essential trade. Debenhams, Arcadia Group stores, and fast food chain Burger King, which all have frontage at Intu sites, are also seeking rent holidays or restructured payments.
Intu says it will now be forced to ask for a covenant waiver on its debt obligations. It is hoping to rush through the sale of a shopping centre in Zaragoza, Spain, which will free up around £95m in liquid cash – though May is the earliest it expects to receive the funds.
It says it will also look to tap into the government’s £330bn support package, and take advantage of other temporary cost-cutting measures implemented by the Chancellor, including the suspension of business rates.