Shopping centre operator, Intu has issued a further update today and said that UK rents for the second quarter was due on March 25 and that only 29% of these have been received, compared to 77% this time last year.
The Lakeside owner further added that all of its centres in the UK and Spain “are operating on a semi-closed basis”. However essential stores, including supermarkets, pharmacies and banks, remain open.
Intu said that “we are in discussions with our customers on the outstanding rents” and highlighted that as of 24 March, the business had available cash and facilities of £184 million at the corporate level.
The shopping operator has been under considerable pressure as recently it feared a potential collapse after the business announced its annual losses nearly doubled to £2 billion in 2019, due to a big decrease in the value of its shopping centres.
Other issues Intu is facing include “the impact of Covid-19 in Europe is delaying certain regulatory approvals in relation to the disposal of Intu Puerto Venecia and we now expect the £95 million proceeds to be received in the middle of May at the earliest.”
In response to this, the shopping operator said it has “significantly reduced capital expenditure for the foreseeable future and are cutting back on head office costs to maintain additional cash within the business. In addition, to support our customers, we have initiated a programme of reducing non-essential service charge costs and are passing on these savings to them.”
Intu also commented that the situation is “likely to continue for the foreseeable future impacting our footfall and potential future rents. The impact of the reduced rents received is expected to require us to seek covenant waivers and we are in constructive discussions with the relevant lenders.”
The business further explained that “in addition to the immediate actions we have taken to preserve liquidity, we have an ongoing dialogue with the UK Government and may look to access their £330 billion support package. In their recent announcement for the protection of commercial tenants from the non-payment of rent, they also stated that they are actively monitoring the impact of this on commercial landlords’ cash flow.”