Trafford Centre owner Intu warns it may go bust as retail crisis deepens and annual losses surge to £2bn

Shopping centre owner Intu has warned it may collapse if it cannot raise new funds after reporting a £2bn loss.

Intu, which owns properties across the UK including the Trafford Centre in Manchester and Lakeside in Essex, wrote down the value of its shopping centres by £1.9bn after a string of retailers that rent its stores went into administration.

In the latest sign of trouble for Britain’s struggling retailers, Intu revealed like-for-like rental income had tumbled 9.1 per cent last year. Half of the fall was due to tenants going into administration or having their rent payments slashed as part of rescue deals.

The number of struggling retailers entering company voluntary arrangements (CVAs) has surged in the last two years as companies seek to cut costs and avoid collapse amid brutal trading conditions.

Debenhams, HMV, Jessops and House of Fraser are among the well-known chains to have called in administrators, close down stores and negotiated rent reductions with landlords.

The trend has caused disquiet among other retailers who feel they face unfair competition from rivals who’ve drastically reduced their rent bills.

The coronavirus outbreak threatens to worsen Intu’s situation as shoppers stay home to avoid being infected. Intu said it was monitoring the situation but had not yet seen a drop-off in visitors to its shopping centres.

There was little sign of respite for the company which said it expects retail valuations to fall further this year. In yesterday’s Budget, the government suspended business rates for small retail firms but not for the larger chains that make up a significant proportion of Intu’s tenants.

Industry groups including the British Retail Consortium have urged the government to reform business rates which have been blamed for deepening a crisis on UK high streets and handing an unfair advantage to online firms.

Julie Palmer, partner at Begbies Traynor, said: “As more high-street brands fail under the ruthless market conditions, Intu has been one of the first victims to suffer with a high number of store closures at its locations, and others seeking to renegotiate rents through CVAs, setting off a dangerous domino effect of renegotiations that hits revenue.

“With a continued shift towards online retailers, Intu needs to innovate to create a greater experience for its customers in order to boost declining footfall and meet shifting shopping habits.

“The threat of the coronavirus will do little to allay fears, with members of the public likely to remain at home and avoid large crowds for the foreseeable future.”

Intu’s share price has fallen from a high of 378p in 2010 to 4.4p on Thursday. The company had planned to tap up shareholders for additional funds last week to help reduce its £4.5bn debt pile but decided against it, citing concern about volatile markets.

Chief executive Matthew Roberts said: “In the short term, fixing the balance sheet is our top priority. We have options including alternative capital structures and further disposals to provide liquidity, and will seek to negotiate covenant waivers where appropriate.”

He added: “We are focusing all our energies on moving the business forward.”