Struggling retail landlord Intu has received less than a third of rent due for its second quarter as retailers struggle to pay the bills amid the UK coronavirus crisis.
That forced it to abandon 2020 guidance as its incredibly low shares dropped three per cent to under 4p.
The government has ordered almost all shops save for supermarkets and pharmacies to shut their doors to contain the coronavirus outbreak in the UK.
That left struggling retailers without income to pay rent at the end of March. Intu collected payment from just 29 per cent of tenants. That compares to 77 per cent this time last year.
“We are in discussions with our customers on the outstanding rents,” Intu told investors today, as it also engaged with lenders over relief measures.
Landlord to slash costs in survival bid
And it stripped back spending and said it would slash head office costs to prioritise cash.
“In addition, to support our customers, we have initiated a programme of reducing non-essential service charge costs and are passing on these savings to them,” Intu said.
“The reduced social activity is likely to continue for the foreseeable future impacting our footfall and potential future rents. The impact of the reduced rents received is expected to require us to seek covenant waivers and we are in constructive discussions with the relevant lenders.”
Its shopping centres in the UK and Spain are operating on a “semi-closed” basis, Intu said. Intu said it counts cash reserves of £184m. But the landlord warned the coronavirus crisis has delayed the disposal of its Spanish unit, Intu Puerto Venecia.
“We now expect the £95m proceeds to be received in the middle of May at the earliest,” Intu said.
Prime Minister Boris Johnson has announced business rate relief for all retailers and leisure firms. And chancellor Rishi Sunak has pledged £330bn in government-backed loans to keep small businesses alive during the UK’s coronavirus shutdown.
Coronavirus compounds Intu’s issues
But while the state has offered to pay 80 per cent of wages to convince companies to keep staff on during the crisis, it piles pressure on Intu, which was struggling before the outbreak.
It cancelled a sensational £1bn cash call earlier in March after it failed to persuade shareholders to fork out. Analysts said that cast doubt on the future of the firm before Intu itself warned its outlook was uncertain.
Intu has been plagued by a general retail sector downturn, and has suffered amid widespread store closures and rent cuts.
Today it said it would seek to take advantage of the government’s £330bn loans package.