Struggling UK retail REIT Intu Properties said on Friday that it is likely to appoint administrators, after failing to reach agreement with creditors on further relief regarding its debt commitments.
Intu, which is expected to pick KPMG as its financial administrator, was seeking to extend a revolving credit facility covenant waiver expiring this evening in a bid to stave off potential breaches of its debt commitments, precipitated by the coronavirus pandemic. It said talks with creditors failed due to ‘insufficient alignment’.
‘The board is therefore considering the position of Intu with a view to protecting the interests of its stakeholders. This is likely to involve the appointment of administrators,’ Intu said.
The firm, one of the UK's biggest shopping centre owners, said last week that it would seek to freeze repayments for the next 18 months, with requests to lenders including relief from financial covenant testing, debt amortisation and facility maturity payments, with interest switching to 'pay if you can'.
Intu had already warned that it might fail to meet its obligations by the end of June after struggling to collect rental payments from retail tenants and seeing shopping centre valuations plummet during the pandemic.
The landlord recently revealed that it had managed to collect just 29% of rents for the second quarter, compared to 77% in 2019.
Intu did manage to complete the sale of Puerto Venecia to Generali and Union Investment in May for €475 mln, but bondholders are said to be planning to seize assets, should the firm fail to cover its debts. Experts say a fire sale by administrators would cause negative ripples across the entire UK retail property sector.
