Bondholders of debt secured against shopping centres owned by Intu Properties are drawing up plans that could lead to them taking control of the assets.
Clifford Chance, the law firm, and Moelis & Company, an investment bank, have been appointed to advise bondholders of £1.3 billion of debt secured against centres at Lakeside in Essex, Braehead, in Glasgow, Watford, in Hertfordshire, and the Victoria Centre in Nottingham. The instruction was first reported by React News, a property website.
Intu is at risk of breaching a series of covenants on the debt held against the assets as sliding shopping centre valuations put pressure on its loan-to-value ratios. If it breaches its covenants after its next valuation in June, a new manager could be put in place to oversee the assets.
Intu employs about 2,500 people and owns 14 shopping centres in the UK. It has been caught out by amassing £4.5 billion of debts as retailers struggle to keep up with rents because of online competition, high business rates and rising wage costs. Covid-19 has exacerbated a decline in rental income with 30 per cent remaining outstanding for last quarters payments.
Intu has already warned that it will breach the terms on some of its debt commitments after tenants paid less than a third of their rent bills in March for the second quarter. Lenders are expected to consider agreeing to a standstill agreement during the present period of market uncertainty, under which covenant breaches would be waived. A dearth of transactions in the retail property market has led some valuers to include “material uncertainty” clauses in their valuations.
A spokesman for Intu declined to comment.
