According to reports on newswire React, bondholders are preparing to take over four of intu’s regional malls where the mall operator is in danger of breaching its loan covenants.
The report, which intu had not refuted as Retail Destination was published, said the lenders had appointed investment bank Moelis & Company and law firm Clifford Chance to advise on their options. This could include taking possession of the properties and appointing new asset managers.
The lenders have a reported £1.3bn of debt secured on intu Lakeside in Thurrock, Essex; intu Braehead in Glasgow; intu Watford and intu Victoria Centre in Nottingham. Intu has confirmed that the loan to value ratio on the four properties had reached 70% as at December 31, 2019.
At that date Knight Frank valued the 1.6m-sq ft intu Lakeside at £1.0bn, reflecting a 5.51% equivalent yield; Cushman & Wakefield valued the 1.123m-sq ft intu Braehead at £278m, reflecting an 8.00% equivalent yield; CBRE valued the 1.142m-sq ft intu Watford at £324.9m, reflecting a 6.11% equivalent yield and Knight Frank valued the 976,000-sq ft intu Victoria Centre at £201m reflecting a 7.36% equivalent yield.
Intu MetroCentre in Gateshead, subject to a separate £485m loan dating from 2013, also looks vulnerable to repossession. In January 2020, Intu first confirmed to bondholders that the loan-to-value ratio at intu MetroCentre had broken through the agreed cap of 70% to stand at 71%. And on March 30 it confirmed the ratio had risen to 72%.
At close of business on April 29, intu shares stood at 5.9p, down from 100p a year previously.