Intu Properties has said it expects to seek covenant waivers from its lenders as the impact of covid-19 hits its rental income.
The group, which owns shopping centres in the UK and Spain, said it had received 29% of its rent for the second quarter when it fell due yesterday (25 March 2020). For the same period last year it had received 77% of rent on the quarter day.
All its centres are semi-closed, in line with government advice, with only essential stores such as supermarkets, pharmacies and banks open.
“The reduced social activity is likely to continue for the foreseeable future impacting our footfall and potential future rents,” the group said. “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.”
Intu added that it was in ongoing dialogue with the UK government and may look to access the £330bn 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,” Intu said. “Other government measures announced of business rates suspension, employee cost support and tax payment deferrals, are also expected to have a positive impact.”
The group said it had significantly reduced capital expenditure and was cutting back on head office costs to maintain additional cash within the business. It has also initiated a programme to reduce non-essential service charge costs and is passing these savings on to its tenants.
The group, as at 24 March 2020, it had immediately available cash and facilities of £184m at the corporate level. It added that covid-19 had held up certain regulatory approvals in relation to the disposal of the intu Puerto Venecia mall in Spain. It now expects the £95m of proceeds to be received in the middle of May at the earliest.
Intu added that it was no longer able to provide guidance in relation to the 2020 financial year and was “assessing all strategic alternatives” for the business. Earlier this month, Intu said it could go bust after posting a £2bn loss for 2019. It also failed in its attempt to raise £1.5bn in an emergency cash call.
INTU : Intu to seek covenant waivers as covid-19 hits rental income