LONDON — Troubled U.K. mall operator Intu has gone into administration, having failed to reach an agreement with its creditors.
Its shopping centers across the U.K. will remain open under the administrator KPMG. The firm said it has appointed three administrators at the KPMG accountancy firm and he appointment is expected “to become effective shortly.”
“Underlying group operating companies remain unaffected and all shopping centers are continuing to trade. The Intu group’s relationships with its tenants are with these operating companies, not the companies entering administration,” said the company in a statement.
The company’s shares listed on the London and Johannesburg stock exchanges have been suspended, after dramatic falls.
Intu’s share price on the London Stock Exchange plummeted 57.4 percent to 1.67 pounds following Friday’s announcement.
Enforced store closures and late rent payments due to the coronavirus lockdown have driven Intu to the edge: Already 4.5 billion pounds in debt, the mall operator has been struggling to squeeze rent payments out of retailers who have only just begun to open after three months.
Earlier today, Intu said while discussions with creditors have continued with regard to the terms of its standstill agreements, there remains “insufficient alignment.”
“The board now needs to protect the interests of its stakeholders, and this is likely to involve the appointment of administrators,” the company added.
Intu has 2,500 employees and owns 17 shopping centers, including Lakeside in Essex, England, and Milton Keynes in Buckinghamshire, where Harrods was set to open two premium H Beauty pilot stores this past spring.
As reported in October, Harrods had planned to trial the H Beauty retail concept before rolling it out. The Lakeside site, spanning 23,000 square feet, was set to open first, but quarantine measures meant those plans have been postponed until later this year.
WWD has contacted Harrods for comment about the stores’ future.
Intu, a victim of retail closures, the rise of online shopping and decline in footfall, was struggling even before COVID-19 hit.
In April 2018, the rival British shopping centers giant Hammerson called off its planned acquisition of Intu’s parent company Intu Properties, citing the growing weakness of the U.K.’s high-street retail sector.
At the time, Hammerson highlighted weakening consumer confidence and the reduced financial strength of retailers and tenants at Intu’s properties, including Manchester’s Trafford Center, a number of which had gone into administration.
The Intu deal in 2018 was valued at 3.4 billion pounds and would have made Hammerson, which owns high-traffic malls such as Brent Cross in London and Birmingham’s Bullring Center, the biggest property company in the U.K.
The climate in the U.K. has only worsened over the past two years, with pandemic-related closures forcing scores of brick-and-mortar retail brands and chains into administration including Laura Ashley, Cath Kidson, Debenhams. All three retailers still exist, and are in the process of being downsized or restructured.
According to the Centre for Retail Research, some 20,620 stores in the U.K. will shut this year, 27.1 percent more than last year. The CRR said job losses caused by a combination of store closures and businesses slimming down their workforce should total 235,704, 61.5 percent higher than in 2019.