Intu seeks standstill with lenders until December 2021

Embattled shopping centres owner Intu Properties on Monday said seeking standstill-based agreements with lenders is its best option, as it grapples with Covid-19 disruption and expected covenant breaches.

The Lakeside landlord, which has a near-£4.5 billion debt mountain, had already been grappling with retailers seeking rent cuts and closures due to tough High Street conditions.

Earlier this month it said it had secured waivers for some breaches of certain bank covenants that might have arisen before June. That gave it more time to negotiate with lenders as it tries to fix its balance sheet. But Intu today warned of further pain ahead.

Intu said “significant market uncertainty” remains regarding the impact of the Covid-19 lockdown. Most stores are shut at its malls and many tenants did not pay a March quarterly rent bill.

It said the impact on rental collections and valuations as at the end of June is likely to result in covenant breaches.

Current market conditions would make property sales to raise funds difficult, the firm added.

Intu said proposed standstill agreements would let it avoid breaching covenants on loans until December 2021.

Intu thinks the best way forward to achieving stability is "through such a standstill until the market dislocation has stabilised and asset valuations and portfolio performance can be better understood by investors and debt providers and risk can be appropriately priced".

Talks will be with lenders, including Bank of America, Barclays, Credit Suisse, HSBC, Lloyds, Natwest and UBS, plus bondholders and lenders on individual properties.

Stifel analyst Denese Newton said “lenders may have no choice” but to agree to Intu’s proposals given how difficult it would be to sell any assets they took control of.

Intu shares rose 0.13p, or 3%, to 4.46p today, on hopes of more breathing space.