Edcon: A catch-22 for mall owners
Landlords are likely to agree to lower rentals for Edcon, rather than lose the income completely
It seems highly likely that SA mall owners, including a number of JSE-listed heavyweights, will agree to Edcon’s rent-reduction request in a bid to prevent SA’s largest clothing retailer from going belly up. But the big worry is that cutting Edcon’s rent will hit the dividend payouts to shareholders of at least a dozen JSE-listed stocks that hold multibillion-rand shopping centre portfolios. These include Hyprop Investments, Liberty Two Degrees, Growthpoint Properties, Redefine Properties, Attacq, Resilient Reit and Fortress Reit. These companies own some of SA’s leading malls including Sandton City, Eastgate and Melrose Arch (Liberty Two Degrees); Rosebank Mall and Canal Walk (Hyprop); Victoria Wharf at the V&A Waterfront and Brooklyn Mall (Growthpoint); and Mall of Africa (Attacq). In December, Edcon asked 31 of its SA landlords to reduce the rent for its 1,350 Edgars, Jet and CNA stores by 41% for two years in exchange for a 5% equity stake in its business. The proposal to mall o...
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