Trafford Centre owner Intu has said it expects to breach covenants on its current loans as its shopping centres struggle in the face of coronavirus pandemic, and that talks with its lenders over its finances are continuing.

Intu said significant market uncertainty remained regarding the impact of Covid-19 on the operations of Intu’s centres which, with the exception of essential stores, remain semi-closed until at least June 1.

The impact on rental collections and valuations at the end of June is likely to result in breaches of covenants or material liquidity requirements if any such breaches are to be cured in accordance with the financing documents at that time.

With the investment market effectively closed there is also material uncertainty for any asset disposal or additional funding process which Intu might pursue to address covenant issues.

The standstill arrangements would seek relief from financial covenant testing, debt amortisation and facility maturity payments for a period through to no later than December 31, 2021. The standstill provisions would also aim to achieve self-funded operational and financial costs only across the different property owning sub-structures, without recourse to Intu properties for any shortfalls during the standstill period with interest being ‘pay if you can’.


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