Share Search
Visit the Share Search
Intu Properties warns it could go bust as losses widen
12th Mar 2020 09:01
(Sharecast News) - Shopping centre owner Intu Properties warned it could go out of business on Thursday as it posted a widening of its full-year losses.
Losses in the year to the end of December 2019 widened to ?2bn from ?1.2bn in 2018 as revenue slid 38.8% to ?542.3m, mainly due to a reduction in rent receivable from the impact of CVAs and administrations and increased vacancy.
The market value of Intu's investment and development property slumped to ?6.6bn from ?9.2bn the year before.
The owner of the Trafford Centre said it would not be paying a final dividend for the year following a 4.6p a share dividend the year before.
"Our results are evidence of the challenges in our market, in particular structural changes ongoing in the retail sector, with some weaker retailers struggling to remain relevant in a multichannel environment," it said. "This has led to a higher level of administrations and CVAs and has been exacerbated by the continued weak consumer confidence from the political and economic uncertainty in the UK."
The company highlighted "a material uncertainty" in relation to its ability to continue as a going concern.
"However we have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate. These would address potential covenant remedies and the upcoming refinancing activities, with the first material debt maturities in early 2021."
For 2020, it expects like-for-like net rental income to be down, but by a lower amount than 2019. Intu said that while the Covid-19 outbreak is evolving rapidly, its footfall for the first 10 weeks of 2020 has been broadly unchanged.
At 0950 GMT, the shares were down 17% at 4.70p.
RBC Capital Markets said: "Intu's higher financial gearing amplifies the significant near-term risks from the current turbulence and uncertainty in UK retail property markets currently. Any weakness in Intu's performance risks feeding what appears to be negative investor sentiment towards its longer-term prospects in our view. In contrast, we believe Intu's large shopping centres generally have the characteristics needed to benefit from a polarisation in retail property performance."
Losses in the year to the end of December 2019 widened to ?2bn from ?1.2bn in 2018 as revenue slid 38.8% to ?542.3m, mainly due to a reduction in rent receivable from the impact of CVAs and administrations and increased vacancy.
The market value of Intu's investment and development property slumped to ?6.6bn from ?9.2bn the year before.
The owner of the Trafford Centre said it would not be paying a final dividend for the year following a 4.6p a share dividend the year before.
"Our results are evidence of the challenges in our market, in particular structural changes ongoing in the retail sector, with some weaker retailers struggling to remain relevant in a multichannel environment," it said. "This has led to a higher level of administrations and CVAs and has been exacerbated by the continued weak consumer confidence from the political and economic uncertainty in the UK."
The company highlighted "a material uncertainty" in relation to its ability to continue as a going concern.
"However we have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate. These would address potential covenant remedies and the upcoming refinancing activities, with the first material debt maturities in early 2021."
For 2020, it expects like-for-like net rental income to be down, but by a lower amount than 2019. Intu said that while the Covid-19 outbreak is evolving rapidly, its footfall for the first 10 weeks of 2020 has been broadly unchanged.
At 0950 GMT, the shares were down 17% at 4.70p.
RBC Capital Markets said: "Intu's higher financial gearing amplifies the significant near-term risks from the current turbulence and uncertainty in UK retail property markets currently. Any weakness in Intu's performance risks feeding what appears to be negative investor sentiment towards its longer-term prospects in our view. In contrast, we believe Intu's large shopping centres generally have the characteristics needed to benefit from a polarisation in retail property performance."