The JSE-listed UK mall owner Intu [JSE: ITU] – long a favourite of South African investors wanting offshore exposure – saw its share price slump by more than 16% on Wednesday morning, which wiped out more than R1.4bn of its market value in a single go.
Intu's share price is now 82% lower than a week ago, as the company battles fallout from Brexit uncertainty and a struggling UK retail sector. Intu owns 17 of the largest shopping centres in the UK, including the Trafford Centre in Manchester, as well as a couple of Spanish malls.
On Wednesday morning, the company reported that letting activity has slowed in the past quarter, "as some customers delay decisions due to continued political and economic uncertainty".
The company signed 47 long-term leases over the past three months, but rents were 4% lower than in the same quarter last year.
Intu now expects that its like-for-like net rental income for 2019 will be down by around 9%, due in large part to the impact of deals struck with insolvent retailers to help keep them afloat. A large number of insolvent UK retailers, including Monsoon, Accessorize, Topshop, Debenhams and House of Fraser, have applied for so-called company voluntary arrangements (CVAs), which allow them to write off debts.
Intu, which is battling its own £4.9bn (R93bn) debt burden, said fixing its balance sheet is its "number one priority".
It is considering selling some of its UK malls, and is making progress to sell two Spanish properties. It may also raise equity.
Intu(shopping) in UK gave a trading update. They tried to give the best possible scenario that they could about leaving, but the deals that that have had to make with Tenants under CVA agreements are worse and will have to sell properties to pay debt in 2y time. Share -16%— Wayne McCurrie (@WayneMcCurrie) November 6, 2019