Shopping centre owner Intu has warned of its future if it cannot raise extra funds, after it reported a £2bn loss for the year ending 31 December 2019.
In the update announcing the news, the owner of Intu Lakeside and Manchester’s Old Trafford centre, said there is “material uncertainty” in relation to Intu’s ability to continue as a going concern.
It comes after Intu revealed it wrote down the value of its shopping centres by £1.9bn after a number of retailers that occupy space at its centres entered administration or issued CVAs. It also revealed that like-for like rental income decreased by 9.1% compared to the previous year.
As a result, Intu said it will try and raise extra cash through selling off more assets, refinancing its £4.5bn debt and negotiating with its lenders.
Intu chief executive, Matthew Roberts, said: “In addition to having been a challenging year, 2019 has been a year of change for Intu. I took over as chief executive in April and in the summer I introduced our five-year strategy. With the pace of change accelerating in our sector, radical transformation was required, so we carried out a comprehensive review of the business and tested our findings to develop the strategy.
“Our review of the business looked at the risks and opportunities of the evolving retail market, and along with an assessment of our underlying strengths, helped formulate our strategy for the next five years. This will reshape the business by way of four strategic objectives, detailed below. I am pleased to say we have already taken steps to deliver this strategy.”
He added: “However, there are challenges. In the year, we made a loss of £2bn predominantly due to a property value deficit of 23 %which is now 33% down from the peak in December 2017.
“This results in our debt to assets ratio increasing to 65%, adjusted for the Spanish disposals, highlighting the importance of fixing the balance sheet in our strategy. Although we were unable to proceed with an equity raise, we have a range of options including alternative capital structures and asset disposals.”