200 shopping centres at risk of administration

More than 200 shopping centres in the UK, worth around 7 billion pounds, could be close to collapsing into administration or receivership if they can’t secure fresh equity for refinancing and redevelopment, according to new research from Apam.

The asset management firm estimates that the number of shopping centres in danger of breaching debt covenants has risen by 75 percent since it started tracking the market a year ago, which it states has been driven by the increasing number of CVAs and falling market values.

Apam’s analysis is based on transactions that took place using debt, mainly between 2012 and 2015, and are now coming towards the end of normal bank financing periods, leaving numerous shopping centres across the UK in danger as footfall and profit drops means they have lost their value.

One example given by Apam was the sale of Callendar Square Shopping Centre in Falkirk, Scotland, which was valued at more than 25 million pounds in 2006, however, when sold in 2017 at auction it went for 1 million pounds.

Apam adds in a blog on its website that the whole sector would “benefit from the entry of more long-term investors” to secure the future of shopping centres across the country.