(Bloomberg) -- U.K. shopping-mall owner Intu Properties Plc has been left at the altar for the second time this year.
A Brookfield Property Group venture abandoned its pursuit of the company on Thursday, a day after the Bank of England warned that a disorderly departure from the European Union could cause U.K. commercial property prices to slump. In response, Intu said it would slash its dividend as the company seeks to reinvest in its portfolio to replace failing retailers while cutting its debt.
Intu dropped as much as 41 percent in London, the most since the shares were first traded in 1992. That slashed the company’s market value to about 1.6 billion pounds ($2.1 billion).
The U.K. company has been hit by a succession of challenges since the Brookfield venture announced it was working on a potential offer last month, including slumping values of its portfolios and major tenants such as House of Fraser threatening to sever ties with the landlord. Rival Hammerson Plc abandoned an attempt to buy the company earlier this year.
“Given the uncertainty around current macroeconomic conditions and the potential near-term volatility across markets, the consortium is not able to proceed with an offer within a timeframe which is manageable within the confines of” takeover rules, the Brookfield group said in a statement. The venture also includes Peel Group and Olayan Group, which together own almost 30 percent of Intu’s shares.
U.K. mall owners have been rocked by the growth of e-commerce and the risk that a no-deal Brexit could wreak havoc on the country’s retail market. Commercial property prices could fall by almost half if Prime Minister Theresa May fails to get parliament to back her Brexit deal and the country crashes out of the EU without a transition agreement, the Bank of England said.
Intu, which owns 17 U.K. malls and three in Spain valued at about 9.6 billion pounds, will now refocus on the search for a chief executive officer to replace David Fischel, who announced plans to leave the company in July. That followed the collapse of the attempted takeover by Hammerson.
“Intu’s focus is on delivering strong total shareholder return over the medium term and believes that maintaining cash in the business by reducing the dividend to fund the investment program will be highly beneficial to the total returns Intu can achieve,” Intu said.
The collapse of the deal will likely put further pressure on U.K. mall values as many landlords looked to the takeover as evidence of the enduring demand for physical stores. Intu has written down the value of its assets by about 9 percent this year.
“A no deal is even more concerning for valuations; at that point, it’s anyone guess quite where the bottom is,” Green Street Advisors analyst Hemant Kotak said in an email.
Billionaire Peel Group Chairman John Whittaker, Intu’s largest shareholder, said he remains committed to the company, citing the potential to develop underutilized land in its portfolio to develop homes, offices and hotels.
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