Intu, the renowned shopping centre giant, experienced a boost in its share price after revealing a positive cash position. However, the company anticipates a decrease in rental income. In its recent report, Intu divulged that if it can secure an agreement with its lenders, its cash position will remain positive throughout 2021.

Since the outbreak of Covid-19, Intu has encountered numerous challenges. The decline in rental income has necessitated the seeking of covenant waivers from its banks. In an effort to persuade its creditors to waive its debt obligations, the property firm foresees a decrease in its cash position from £81.1 million in the second half of 2020 to £24.1 million by December. Nevertheless, it expects this figure to rise to £62.6 million by the end of 2021 as the retail sector recovers from the impact of the pandemic. This news brought relief to investors who were concerned about the company’s survival.

In May, Intu announced its intention to pursue standstill agreements for up to 18 months on interest payments and covenant breaches. These agreements, deemed the most favorable path of action in the current market dislocation, would provide a breathing space until the pandemic subsides. Despite the challenges they face, Intu remains optimistic and has outlined plans for the gradual reopening of non-essential retail stores at its 14 UK shopping centres. Each centre has devised individual plans that incorporate new measures to ensure social distancing and hygiene practices. Although rental income is projected to decline to £310 million this year from £491.6 million in 2019, management maintains hope for the future.

With a staggering £4 billion debt and the expected changes in consumer behavior following Covid-19, Intu confronts significant obstacles. Nevertheless, the company is actively adapting to the current situation and working towards finding solutions that will enable it to navigate through these challenges successfully.

Useful links:
1. Intu Group Official Website
2. Financial Times article on Intu’s challenges