Shopping centre owner Intu (INTU.L) has collapsed after last-ditch talks with its creditors failed.
Intu Properties, which owns Manchester’s Trafford Centre and the Lakeside shopping centre in Essex, on Friday afternoon that it had appointed KPMG as administrators and shares would be suspended.
The announcement came hours after Intu warned administration was “likely” after a failure to reach a deal with credits ahead of a crunch deadline for debt repayment at midnight 26 June. Intu said earlier in the week that KPMG were on standby in case talks failed.
Shares fell 53% on Friday before suspension, falling to just 1.8p. The company was part of the FTSE 100 as recently as 2017 but is now worth just £20m ($24.8m).
Intu’s shopping centres will continue to operate as normal while KPMG seeks a buyers for the business or its assets.
The company was struggling under a £5bn debt pile even before the COVID-19 crisis hit but the pandemic has worsened problems. Intu collected less than a third of rent due from tenants at its shopping centres in the first quarter of 2020, leaving it struggling to make repayments on its large debt pile.
“Already in a sorry state before coronavirus, the pandemic and effective shuttering of its sites has tipped it over the edge,” Russ Mould, investment director of stockbroker AJ Bell, said in an email.
“Some of the factors which have led the company to this point have been out of its control, but others have been of its own making.
“A shift to online shopping has hit rental income and valuations at its out-of-town shopping malls and Covid-19 has clearly had a devastating impact.
“However, the business took on too much debt and in hindsight was buying up assets at the wrong time in the early to mid-2010s. The fact several suitors took a look at the business in the last couple of years before walking away should have set alarm bells ringing.”
The Trafford Centre and Lakeside are Intu’s crown jewels but the company owns property worth £10bn across the UK.