Cir­cling the plug­hole

Financial Mail - - DIAMONDS & DOGS -

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.

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