Intu Properties has appointed KPMG to make a ”contingency plan” for administration should talks with its creditors fail.
Intu, which owns close to half of UK’s top-20 shopping centres including Intu Lakeside, Essex and the Intu Trafford Centre in Manchester, warned in March that it could go bankrupt after citing a property valuation deficit as the main contributor to its £2bn (€2.2bn) loss for 2019.
At the time, Intu also said it had ended talks with investors regarding a possible equity raise of between £1bn and £1.5bn due to the “uncertainty in the equity markets and retail property investment markets”.
Although the company was unable to proceed with an equity raise, it said it had a range of options including alternative capital structures and asset disposals.
In the latest update, the real estate investment trust said talks with lenders to progress a “standstill strategy” is ongoing but cautioned that there is no certainty as to ”whether it will achieve the standstill, or on what terms or for what duration”.
“Notwithstanding the progress made with lenders, Intu has also appointed KPMG to contingency plan for administration.
“In the event that Intu properties plc is unable to reach a standstill, it is likely it and certain other central entities will fall into administration.”
Colm Lauder, a Goodbody real estate analyst, said: “The future of Intu Properties remains uncertain as we wait to hear on whether it will secure standstill agreements” across its structures from its creditors.
“If this is not secured it is likely that Intu along with some other central entities will fall into administration. KPMG have been appointed to contingency plan for administration.”
In such situations, property companies would be required to pre-fund the administrator to provide central services to shopping centres, with the risk that centres will have to temporarily close if this pre-funding is not agreed, Lauder said.
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