U.K. Mall Owner Says Most Stores Fail to Pay Their Rent

(Bloomberg) --

Intu Properties Plc is in talks with its creditors to waive some of its loan terms after the spread of the deadly Covid-19 forced all of its malls into a state of partial closure.

The landlord, which owns nine of the U.K.’s largest malls, collected just 29% of the rent that was due Wednesday for the next quarter, according to a statement on Thursday. That’s less than half as much of the amount it had collected at the same time a year earlier.

The outbreak of the coronavirus has dealt a severe blow to the owners of bricks and mortar stores in the U.K. Intu was already scrambling to raise capital and slash its debt even before the virus threatened the survival of many of its biggest customers.

The U.K. government has temporarily suspended landlords’ right to evict commercial tenants for non payment of rent to help deal with the crisis, shifting the emphasis to landlords and lenders to agree solutions to a potential cashflow crisis.

“The reduced social activity is likely to continue for the foreseeable future impacting our footfall and potential future rents,” Intu said in the statement. “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.”

The outbreak has also delayed the completion of the sale of one of the company’s Spanish malls, meaning it does not now expect to receive the full proceeds until the middle of May at the earliest. Intu currently has 184 million pounds ($219 million) of cash and available credit, according to the statement.

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