Trafford Centre and Lakeside owner Intu warns shopping centres could close as it’s ‘likely’ to call in administrators

THE owner of Lakeside and the Trafford Centre has warned that its shopping centres are at risk of closing as it is "likely" to call in administrators.

Intu Properties had been in crunch talks with lenders in an attempt to secure breathing space from repaying debt to keep the business going. 

But today it said they had been unable to reach an agreement and that talks had hit a "standstill".

The group owns 17 shopping centres in the UK, including the Victoria Centre in Nottingham and Intu Watford, as well as three in Spain.

Closure of its sites could put 132,000 retailer workers out of a job.

Earlier this week, Intu placed accounting firm KPMG on standby to create a “contingency” plan should it fail to finalise a deal with creditors.

The group hasn’t officially entered administration at this stage, but has already thrashed out the preparatory work should it happen. 

It said that it is planning on making an announcement "as soon as possible".

The group is struggling because it has been unable to collect full rental payments from some retailers due to reduced rates in place following the coronavirus crisis.

It had hoped to arrange an 18-month break from repaying its debt, but says some creditors will only allow it 15 months.

Intu warned that if it can’t reach an agreement, and it doesn’t receive upfront funding from lenders, some shopping centres “may have to close for a period”.

The company had set a deadline of June 26 for an agreement, with administrators to be called in after this date if a deal hasn’t been reached.

While Intu shopping centres have remained open during lockdown, the majority of stores inside have been closed after the government ordered all “non-essential” businesses to shut.

Shops that were allowed to stay open include banks, pharmacies and those that sell food.

In its Lakeside shopping centre in Essex, only around 10 per cent of stores were in operation throughout lockdown.

But the group was struggling before the coronavirus crisis, and was reported to be £4.5billion in debt at the start of this year.

Several of its retailers, including Debenhams, House of Fraser, and Topshop’s owner, Arcadia, have undergone emergency restructurings, closed stores or requested rent reductions.

Meanwhile, an increase in online shopping and rising costs for retailers have also placed many UK retailers under strain.

Intu said talks were focused on the length of a possible standstill and changes to how shopping centres are funded to allow them to pay for staff, such as security and health and safety.

On Tuesday it said: "Some centres have reduced rent collections as a result of Covid-19 and cash trapped under their financing arrangements which restrict their ability to pay for support, such as shopping centre staff, from other entities in the Intu group.

"In the event that Intu Properties plc is unable to reach a standstill, it is likely it and certain other central entities will fall into administration.

"In this situation, all property companies would be required to pre-fund the administrator to provide central services to the shopping centres.

"If the administrator is not pre-funded then there is a risk that centres may have to close for a period."

Retailers that have sadly fallen into administration this year include Victoria's Secrets, Oasis, Warehouse and Debenhams.

Shoe chain Aldo has also collapsed, while Quiz clothing has put its shop business into administration.

We've got a full round-up of all the shops and restaurants that have gone bust here.