Ten years after it was formed as a brainchild of the late billionaire philanthropist Donald Gordon, Intu Properties, the UK’s largest shopping mall chain, has entered administration and may not see out 2020.
Intu’s listing on the JSE main board was suspended on Friday after the company said that it had appointed KPMG as administrator after failing to secure an agreement to defer payments on some if its almost R100bn debt.
It is a spectacular fall for a company whose London-listed shares were worth more than R100bn less than five years ago. It could disappear from both exchanges.
Gordon, who died in 2019, founded the Liberty Life Association of Africa in 1957, out of which he formed Transatlantic Insurance, which was later renamed Liberty International.
A decade ago, Liberty International, which housed Liberty’s UK properties, was split into two companies: Capital Shopping Centres, renamed Intu in 2013, and Capital & Counties (Capco).
Intu owned various malls around the UK while Capco owned a retail development at Covent Garden and a residential development at Earl’s Court in London.
Intu’s management declined to be interviewed on Friday. On Sunday it said it will not answer questions sent by Business Day. “You will need to contact the administrator, KPMG, for further details,” the company said.
Intu had said in the week that it needed to get its creditors to waive terms on £600m (R12.9bn) of loans until the end of 2021.
Intu said it had made an application for KPMG to be appointed as joint administrator to the group as a whole, and to several other key central entities.
The share price of the mall owner slumped 72.38% to a record low of 29c on Friday, leaving it with a market value of just R363m, according to Infront data. Its previous record one-day drop, of nearly 40%, was recorded on November 29 2018.
Once one of the darlings of the listed property sector, Intu shares reached a record high of about R75 in November 2015 with a market cap of about R105bn. But Intu has struggled to survive a changing retail landscape in which e-commerce is increasingly competing with high street retail.
Like other companies whose fortunes are closely tied to consumer spending, Intu, which owns the Trafford Centre in Manchester, was hit heavily in the wake of the Brexit vote in 2016. Even before Covid-19 hit and left retail tenants seeking payment holidays, it had been struggling with debt of about R100bn.
More than 10% of Intu is owned by SA institutions and individuals. The UK's Peel Group, which has about 10% of the company is its largwst shareholder. Investec owns about 6%, and the Gordon family retains 6%. Coronation which held nearly 10%, sold its stake at the end of March 2020.
Keillen Ndlovu, head of listed property funds at Stanlib, said there are no clear signs about how Intu will survive.
“It’s becoming difficult to see how Intu comes out of this, even if they delist. The complex debt structure [and] lower rent collections, exacerbated by Covid-19, has put Intu in a very tough position. Selling assets in this environment is more likely to require a sizeable discount,” he said.
The group’s share price has fallen 99% over the past two years.
Update: June 26 2020
This article has been updated with additional information and share price data.
Correction: June 29 2020
This article has been corrected to indicate that Coronation no longer holds Intu shares
With Karl Gernetzky
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