A Debenhams department store at Intu Properties' Watford shopping centre in London, England. Picture: REUTERS/ PETER NICHOLLS
A Debenhams department store at Intu Properties' Watford shopping centre in London, England. Picture: REUTERS/ PETER NICHOLLS

Intu Properties, which was unbundled from Donald Gordon’s Liberty International in 2010, saw more than R2bn, or a fifth of its market value erased on the JSE on Wednesday after a trading statement warned its rental income growth would slow.

The company, which owns 17 malls in the UK and three in Spain, said it expected like-for-like rental income for its 2019 financial year to December fall 9%.

In a trading update for the three months to November 5, CEO Matthew Roberts said letting activity during the period had been slower, because some customers delayed buying decisions because of political and economic uncertainty.

Intu and other JSE-listed, UK-focused landlords, including Capital & Counties and Hammerson have been under pressure since Britain voted to leave the EU in 2016. Brexit has resulted in an extended period of uncertainty, with the UK’s exit date having been repeatedly pushed back, with the latest delay until January 2020.

But Intu said it was making progress in shoring up its balance and was close to selling two Spanish assets to raise equity.

“Our number one priority is to fix the balance sheet. We have a clear plan to do this and are working to make material progress over the next six months,” said Roberts.

“We continue to consider all options to put us in the best position to deal with both our short and medium-term liquidity requirements as we approach our next material debt maturity in early 2021.”

Peter Clark, a portfolio manager at Investec Asset Management, said Intu would sell its Spanish assets to decrease its loan-to-value.

Spanish assets might be easier to sell than UK assets as they did not come with Brexit uncertainty, Evan Robins, a fund manager at Old Mutual Investment Group, said.

Roberts declined to say which Spanish assets Intu was close to selling.

“We are in advanced stages to sell two assets and hope to provide an update in the relatively near future, but it would be inappropriate to commit to a time frame as discussions are ongoing,” said Roberts.

The company had net debt of £4.68bn (R88bn) as of its six months to end-June, while its market capitalisation as of Wednesday was about R8.5bn.

The company’s share price closed more than 20% lower at R6.25, bringing its year-to-date loss to 70%.

Intu’s management is trying to change strategies so that it can recover from its malaise.

Roberts said in July that Intu would develop hotels and residential units around its malls. The company plans to develop about 6,000 residential units including apartments and houses.