The problems at Intu puts more than 100,000 jobs in jeopardy. Some of its more famous sites are likely to be sold, while others could be lost forever.
Some of Britain’s largest malls are facing closures, which threatens to lower the focus on retail recovery.
Intu Group, the owner of 14 centers across the UK, including Lakeside in Essex and the Trafford Center in Manchester, has become more involved.
Problems at Intu endanger over 100,000 jobs.
Boris Johnson responded to the news with a promise of support for retailers. When asked if he would intervene, he said: ‘Shopping malls have been feeling the squeeze and we will do everything we can to look after them.’
There are concerns that Intu malls may need to be closed, at least temporarily, while administrators are trying to find buyers.
Some of its more famous sites are likely to be sold, while others may be lost forever.
This would be a disaster for thousands of families and many local economies. For example, a mall in Watford employs 10 percent of the local workforce.
The closure of stores since late March triggered a retail crisis that was already devastating High Street and shopping malls with a shift to online shopping.
Many of its high profile tenants, such as Debenhams, House of Fraser and Topshop, have closed stores, while thousands of others have stopped paying rents.
This week, it turned out that British retailers paid only 13.8% of the rent due to their homeowners to cover the next three months.
The failure of Intu occurs simultaneously with the fact that the government hopes that the easing of blocking and a return to purchases will breathe life into the economy after the pandemic.
The crisis in retail, which is expected to see many more stores boarded up in the coming weeks and months , has turned the balance sheet at Intu red. Its latest annual report points to an annual loss of £2billion and debts of £4.5billion. Against that, the company’s market value is estimated at less than £30m. Yesterday, the group’s shares fell 54.6 per cent, or 2.13p, to just 1.78p, taking the stock’s losses during the past 12 months to 98 per cent.
Chief executive of data provider Retail Economics, Richard Lim, said: ‘While the collapse has been highly anticipated, its significance cannot be understated. Many retail landlords remain stuck in an age of analogue retailing, sluggish to adapt their business model to the inevitable impact of online and evolution in consumer behaviour.
‘Permanent changes in the way people work, travel and communicate will also create further challenges for destinations reliant on high levels of footfall from office workers.’
Jim Tucker, David Pike and Mike Pink from KPMG’s were appointed by the joint administrators of Intu Properties.
KPMG said all malls will remain open and operational, while joint administrators are evaluating options.
Tucker said: ‘The challenges affecting UK retail are well known and have been exacerbated by the impact of Covid-19 and the resulting lockdown.
‘As today’s administration makes clear, those challenges have fed through to owners of retail property, even to owners of high-quality shopping centres such as Intu’s.’
And Pike added last night: ‘With all centres remaining open, we look forward to working with staff, suppliers and other key stakeholders to preserve value and jobs in these important retail destinations.’