Picture: INTU
Picture: INTU

Intu Properties, one of the casualties of the Brexit vote, has attracted another potential suitor, sending its shares up as much as 30% on Friday. The company’s shares pulled back slightly to close 23.5% higher at R35.25 on the JSE.

The jump in the share price translated into a gain of about R9bn in market value for the UK shopping mall owner, which has a rich SA heritage through its historical link with Liberty International.

A consortium of three companies — including British billionaire businessman John Whittaker — are reportedly considering buying shares in Intu that they do not already own.

Investment group Peel Group, of which Whittaker is the executive chairman, already owns a 27.32% interest in Intu. The other entities in the consortium are Saudi Arabia-based investment group Olayan and Brookfield Properties.

Intu said it has formed an independent committee to look into the merits of the proposal once it is tabled to the board.

The talk of a fresh offer comes five months after rival shopping mall owner Hammerson dropped its own £3.4bn bid for Intu, saying that the equity market’s perception of the broader UK retail property market had deteriorated.

The uncertainty around Brexit has taken its toll on Intu and other SA companies that have operations in the UK. Private equity group Brait — which is 35% owned by billionaire retail tycoon Christo Wiese — is one example. It bought UK fashion retailer New Look for £780m in 2015 and wrote it down to zero by the end of 2017. 

“Listed companies are not always so smart and often buy assets at the top of the cycle. What they should be doing is buying assets at the bottom of the cycle or when the market is depressed,” said Craig Pheiffer, chief investment strategist Absa Stockbrokers & Portfolio Management.

“There’s no guarantee of a quick turnaround in fortunes just yet either as UK interest rates are slowly on the rise, but you want to be buying good assets in bad times and not bad assets in good times.”

Intu owns 10 of the UK’s top 25 shopping malls and attracts an estimated 400-million customer visits per year across the entire portfolio in the UK.  It has also diversified into Spain, where it owns a 50% interest in each of three of the top shopping malls.

But the fallout of the UK decision to leave the EU has weighed on the valuation of Intu’s property portfolio. Property values fell 5.6% to £9.02bn on a like-for-like basis, its most recent results show.

“Relative to its peers, Intu holds a lower quality property portfolio and has higher debt levels, hence the larger discount to net asset value,” said Lester Davids, trading desk analyst at Unum Capital.

“At its last reported results, the net asset value stood at 362p, which is about R69 at the current exchange rate and implies a 50% discount at today’s price of around R36. This discount has been reflective of the market’s dim outlook for UK retail market coupled with the uncertainty around Brexit.”