Intu Properties has warned it could go bankrupt after citing a property valuation deficit as the main contributor to its 拢2bn (鈧�2.26bn) loss for 2019.
For the year ended 31 December 2019, the company widened its loss from the 拢1.18bn recorded in 2018, a performance it said had been 鈥渆xacerbated by the continued weak consumer confidence from the political and economic uncertainty in the UK鈥�.
CEO Matthew Roberts said: 鈥淚n the year, we made a loss of 拢2bn, predominantly due to a property value deficit of 23%, which is now 33% down from the peak in December 2017.
鈥淭his 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.鈥�
Just last week, Intu, which has, over the past several months, engaged in talks with investors regarding a possible equity raise of between 拢1bn and 拢1.5bn, said it would not proceed with the fundraising.
The reason given was that it 鈥渂elieves the current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business and intu was therefore unable to reach the target quantum at the current time鈥�.
In today鈥檚 announcement, Roberts said although the company was unable to proceed with an equity raise, 鈥渨e have a range of options including alternative capital structures and asset disposals鈥�.
He said: 鈥淚n the short term, fixing the balance sheet is our top priority.鈥�
Roberts said despite 鈥渁 material uncertainty in relation to Intu鈥檚 ability to continue as a going concern鈥�, the company has options including 鈥渁lternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate鈥�.
He said: 鈥淭hese would address potential covenant remedies and the upcoming refinancing activities, with the first material debt maturities in early 2021.鈥�
Roberts, however, said he believed the real estate investment trust, which owns close to half of UK鈥檚 top-20 shopping centres including Intu Lakeside, Essex and the Intu Trafford Centre in Manchester, will address the challenges and 鈥減osition us to take advantage of the opportunities鈥�.
In 2015, the Intu brand went international when it bought its first Spanish asset, Parque Principado. It currently owns three of the top 10 shopping centres in Spain, including Xanad煤 in Madrid.
At 13.00 GMT, the company鈥檚 shares on the London Stock Exchange were 13.35% lower, giving it a 拢66.6m market capitalisation.
In April 2018, fellow shopping-centre owner Hammerson blamed a tough UK retail property market for withdrawing its support to merge with Intu Properties, saying the deal was no longer in the best interests of shareholders.
According to Peel Hunt analysts, survival is now the key focus despite stating that the 鈥渟trategy addresses the challenges and will position us to take advantage of the opportunities鈥�.
鈥淎 material uncertainty exists that may cast significant doubt on the group and company鈥檚 ability to continue as a going concern鈥� given the risk of further valuation declines and the ability to refinance the 拢4.5bn debt pile and reduce the 68% LTV.
From here - as previously disclosed - options include further disposals, alternative capital structures and seeking covenant waivers where appropriate, the analysts said.
