Circling the plughole

So it seems the fat lady has not only sung, she’s removed her make-up and slunk out the stage door, and the only place this shopping centre giant is going Intu is administration.

Founded by Donnie Gordon in 1980, and formerly known as Liberty International and Capital Shopping Centres, the stock was popular with punters looking for a rand hedge backed by bricks and mortar in the shape of a portfolio of UK shopping centres such as the Trafford Centre in Manchester and Lakeside in Thurrock.

Intu, a FTSE 100 company as recently as three years ago, was in trouble even before the pandemic struck. It was struggling to adapt to changes in the retail market, posting substantial losses in 2019 and wobbling with a labyrinthine capital structure and £4.5bn of debt. It failed to get away an emergency cash call in March — then lockdown happened, the government banned landlords from serving tenants with statutory demands and winding-up petitions, and all of a sudden it became acceptable to stop paying the rent.

A mere 14% of retailers paid the rent due on the June quarter day, and unsurprisingly this has left the entire commercial property sector staring into the abyss. Its final collapse was precipitated by the Canada Pension Plan Investment Board, which had a £250m loan secured against the Trafford Centre, and torpedoed plans to give it some breathing space. The shopping centres have been taken over by their lenders and are continuing to trade, but it’s hard to see a great deal of value emerging from fire sales at unprecedented discounts.