Trafford centre could go bust after £2bn loss
THE owner of the Trafford Centre has warned the firm could collapse if it cannot find further funds after losing £2bn in 2019.
Intu Properties - which owns nine of the country’s top 20 shopping centres - has been struggling to cope with the shrinking High Street retail market for some time.
Last month, the group failed to reach an agreement with a Hong Kong-based investor for a refinancing package.
Intu is laden with debts estimated to be around £5bn.
The value of its shopping centre sites has fallen by £1.9bn due to the downturn in the market.
The company also made a £1.2bn loss in 2018 as it was hit by the collapse of several big-name retailers, along with others pushing through insolvency plans known as company voluntary arrangements (CVAs) to reduce rents.
Other retailers, including Hotel Chocolat and Next, have also started demanding their own rent reductions – arguing they should not be penalised with higher bills for being successful.
Intu said due to its most recent results there was a ‘material uncertainty’ over its ability to continue as a going concern.
But bosses say there are other options, such as ‘alternative capital structures’ and selling off more assets. The group is also looking to secure some breathing space from its lenders, by negotiating covenant waivers. It is understood the next time Intu’s property portfolio will be assessed is in July.
Until then the company will be speaking to its lenders and looking at mitigating action such as using some its cash reserves, of which it has around £200m.
Chief executive Matthew Roberts said: “In the short term, fixing the balance sheet is our top priority.
“We have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate,” he said. He added: “We are focusing all our energies on moving the business forward.”
The Trafford Centre remains ‘the jewel in the crown’ of Intu’s shopping centres but industry insiders continue to speculate whether it could be sold, perhaps even back to the Peel Group who sold it originally in 2011. Intu has previously declined to comment on the idea.