Fresh rent headache for beleaguered Merry Hill owner hit by coronavirus blow
The owner of intu Merry Hill is facing renewed crisis after a big fall in the amount of rental income for the next three months.
Intu Properties has only been paid 29 per cent of the 'quarter day' rent for the second quarter of the year in the UK which was due yesterday.
Earlier this month intu warned it could go bust if it cannot raise further funds as it slumped to a £2 billion annual loss.
Last year it had received 77 per cent on the quarter day from tenants of its shopping centres that also include Trafford Centre, Manchester and Lakeside, Essex.
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Intu has only £184 million of cash and other facilities available to it.
"We have significantly reduced capital expenditure for the foreseeable future and are cutting back on head office costs to maintain additional cash within the business," the firm said in a statement today.
"In addition, to support our customers, we have initiated a programme of reducing non-essential service charge costs and are passing on these savings to them," the company said in a statement today.
The new blow follows disastrous annual results announced earlier this month, which saw the firm reporting a loss of £2 billion.
“In addition to the immediate actions we have taken to preserve liquidity, we have an ongoing dialogue with the UK Government and may look to access their £330 billion support package. In their recent announcement for the protection of commercial tenants from the non-payment of rent, they also stated that they are actively monitoring the impact of this on commercial landlords’ cash flow. Other Government measures announced of business rates suspension, employee cost support and tax payment deferrals, are also expected to have a positive impact," the company said.
Given the ongoing uncertainty around Covid-19 it is no longer able to provide guidance in relation to the 2020 financial year.
"In these difficult times we continue to assess all strategic alternatives and will provide further updates as appropriate," added intu.
Its three priorities amid the coronavirus crisis are to look after employees, protect its business and to play its role in society.
All of intu's centres in the UK and Spain are operating on a semi-closed basis. In line with the latest Government advice in both countries, only essential stores, such as supermarkets, pharmacies and banks, remain open.
Intu took complete ownership of the centre in June 2016 after buying out Australian investment group QIC in a £410m deal for its 50 per cent stake.
At that time the Merry Hill was worth around £890m. But the market value of the Brierley Hill shopping centre has now dropped to £587.6m.
It comes as Merry Hill is in the middle of a £12m revamp which includes new cladding surrounding the Debenhams entrance.
The firm still has £10m of work to do with the project is scheduled to complete later this year.
