Trafford Centre owner announces staggering losses of £2bn

The owner of the Trafford Centre and the Arndale Centre made losses of more than £2bn over the last 12 months.

Embattled landowner Intu said the £800m increase in losses was largely driven by falling property values at its shopping centres.

And the debt-riddent company has admitted in its financial results that there is a question mark over it being able to continue as a going concern.

The firm released its full year figures this morning.

Revenues fell by £38.8m to £542m which was due to the large number of administrations in the retail sector in the last 12 months.

Last week Intu revealed that a move to raise £1.5bn from investors to ease its debts had been ditched due to lack of interest.

The mews sent the value of shares in the firm into freefall and the company is now valued at less than £100m.

Chief executive Matthew Roberts pointed out that the firm still owns some of the most profitable shopping centres in the country.

He said: “The right stores in the right locations will always play a vital role for retailers but, with all the recent commentary around the death of the store, you could believe that no one will be going shopping in the future.

“Two statistics from recent research by CACI illustrate the importance of the store. First, around 90 per cent of all retail spend is influenced by a physical store, and second, the presence of a physical store can double a retailer’s online sales in that local catchment.”

He added: “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.

“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.”

Like-for-like net rental income fell by 9.1 per cent in 2019, with over half the change coming from CVA and administrations.

Intu saw property value reductions in the year of 23 per cent and around 33 per cent from the peak in December 2017.

The property valuation deficit was the main contributor to the £2.0 billion loss for 2019.

Mr Roberts said: “Looking in to 2020, we would expect like-for-like net rental income to be down, but by a lower amount than 2019.

“The Covid-19 situation is rapidly evolving and we are closely monitoring the impact on our centres. Our footfall is broadly unchanged for the first 10 weeks of 2020.

“In the short term, fixing the balance sheet is our top priority. 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.

“We are focusing all our energies on moving the business forward. We own many of the best shopping centre locations in the UK, with dedicated staff looking after our visitors who are coming to our centres in the same numbers and like intu more than ever. In a world where it is harder for retailers to increase profits, our centres offer them the best opportunity and many, such as Next, Primark and JD Sports, are thriving.

“But we cannot stand still, and as we have always done, we will focus on placemaking, curating our space to ensure it remains the place visitors love to be.”