One of the owners of The Mall shopping centre has warned over its debts as non-essential retailers remain closed in line with Government guidelines on coronavirus.
Property giant Intu, which co-owns the Cribbs Causeway centre along with M&G Real Estate and JT Baylis, said it could breach its debt covenants by the end of June unless lenders agree to arrangements that allow it to ride out the Covid-19 pandemic.
Intu has been trying to pay down debts of almost £4.5billion through offloading assets and recently sold one of its shopping centres in Spain, according to Bristol Live’s sister website Business Live.
But efforts to bring down debt have been scuppered by the coronavirus lockdown, which has led to the company losing more than half the rent it was due in the first quarter of the year.
Intu has said a “standstill” on its debts until the end of 2021 would give it stability “to explore alternative capital structures and solutions and disposals to ultimately fix the balance sheet.”
The company said in a statement: “Significant market uncertainty remains regarding the impact of Covid-19 on the operations of intu’s centres which, with the exception of essential stores, remain semi-closed until at least 1 June 2020.
“Additionally, at this time, the speed of recovery once the UK comes out of lockdown remains unclear.
“The resulting impact on rental collections and valuations at the end of June is likely to result in breaches of covenants or material liquidity requirements if any such breaches are to be cured in accordance with the financing documents at that time.
“This market backdrop, where the investment market is effectively closed, also creates material uncertainty for any asset disposal or additional funding process which intu might pursue to address these covenant issues."
In March, Intu was forced to scrap plans to raise £1.5billion to help pay off its debts. The company said uncertainty in the retail property investment market had put investors off.
Intu’s troubles come as recent figures from the BRC-KPMG retail sales monitor show that retailers saw the sharpest decline in sales on record last month as people stayed at home due to the lockdown.
