Intu Properties names KPMG as administrator if it fails to strike a debt standstill deal with creditors

Intu Properties names KPMG as administrator if it fails to strike a debt standstill deal with creditors

  • Intu Properties is currently seeking a debt standstill deal with its creditors.
  • The British mall operator may enter administration if it fails to strike a deal by Friday.
  • The real estate investment trust names KPMG as the administrator.

Intu Properties (LON: INTU) said on Tuesday that it might be pushed into closing a few of the most popular shopping centres of the United Kingdom as the Coronavirus pandemic continues to weigh on its performance. The real estate investment trust has approached its creditors for a debt standstill deal. Upon failure to strike a deal before the deadline of Friday, the company said it might enter administration with KPMG serving as the administrator.

Shares of the company are currently about 5% up on Tuesday. At 4.7 pence per share, Intu Properties is more than 85% down year to date in the stock market. Learn more about the financial analysis of a company.  

Intu reported £2 billion of net annual loss in fiscal 2019

Intu is the current owner of prominent properties in the UK and Spain including Lakeside in Essex and Trafford Centre in Manchester. In a recent report, Intu Properties recorded over £2 billion of net annual loss in fiscal 2019 and net debt of £4.69 billion.

Forecasting a massive impact of COVID-19 on its financial performance, Intu had warned in March that its future will be at stake without sufficient funding in the upcoming months. At the time, the British government had not announced a countrywide lockdown to minimise the fast spread of the novel flu-like virus that has so far infected over 300,000 people in the UK and caused more than 42,500 deaths.

As its debt waiver approaches expiry, Intu is currently negotiating for a debt standstill with its creditors. The talks, according to the London-headquartered company, started in May with prominent points of discussion including the standstill duration, and the extent to which its creditors will contribute to the future recovery and funding.

Intu denied Hammerson’s £3.4 billion bid in 2018

In an earlier report in June, Sky News revealed that KPMG was in search of new funding worth £12 million to save a few of Intu’s top-known malls from closure. Its competitor, Hammerson, had showed interested in buying Intu in 2018 for £3.4 billion.

According to Consultancy CBRE, the ongoing health crisis has weighed on retail properties’ value in recent months resulting in an increase in the UK shopping centre’s yields from 4.5% in 2016 to 6.5%. The prime high street yields, on the other hand, rose from 4% in 2018 to 5.75%.

At the time of writing, Intu Properties is valued at £62.39 million.

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