Property companies likely to survive loss of rental income from Edcon

CAPE TOWN – Shopping centre landlords are likely to survive the loss of rental income from Edcon should the retailer seek business rescue proceedings after the 21-day country-wide coronavirus lockdown, analysts said on Friday.

Edcon, one of South Africa’s biggest clothing and beauty retailers, has said it is unable to pay suppliers through a lockdown, and it might have to seek protection from creditors. Under lockdown are all the firm’s 1100 stores, including non-food department chain Edgars, budget clothing retailer Jet Stores and stationery store chain CNA.

The 90-year-old retailer on Thursday projected it would lose a further R800million in turnover during the lockdown.

An emotional Edcon chief executive, Grant Pattison, told suppliers in a conference call that the timing of the lockdown could not have been worse, because March and November were traditionally months of constrained liquidity for the group.

Pattison said Edcon had sufficient liquidity only to pay salaries, and the company was unable to honour any other accounts during the period on the missed sales targets in March and the expected drop in debtors’ book collections. Anchor Stockbrokers’ head of property and research, Craig Smith, said shopping centre landlords had taken considerable steps to dilute their exposure to Edcon over the past year following Edcon’s first restructuring that was necessitated when it ran into financial trouble.