Intu says just 29% of rents are paid, Puerto Venecia sale completion delayed
Mar 26, 2020
Struggling malls giant Intu issued a further update on Thursday and said that all of its centres in the UK and Spain “are operating on a semi-closed basis”. Only essential stores, such as supermarkets, pharmacies and banks, remain open.
The Lakeside owner added that UK rents for the second quarter were due on March 25 and that only 29% of these have been received, compared to 77% this time last year. The news comes at the same time as we heard that many retailers are withholding rents. Primark, for instance, has withheld £33 million in rents for its 189 UK stores while it negotiates deals with landlords.
Intu said that “we are in discussions with our customers on the outstanding rents” and added that as of March 24, it had immediately available cash and facilities of £184 million at the corporate level.
The company is under particular pressure compared to other UK landlords as it’s got a massive debt load and has been selling properties, in Spain in particular, to reduce that liability.
But as well as having recently been frustrated in some of its money-raising efforts, one other problem has arisen. It said “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”.
So what’s it doing now? The company said it has "significantly reduced capital expenditure for the foreseeable future and [we] 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”.
It also said 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”.
It 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”.
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