FINANCE: Capital & Regional is buying a further 62.6% in the Mall Fund for £213m to give it a 91.8% holding in the shopping centre vehicle.
The specialist retail property company has entered into conditional agreement to buy Aviva’s 52.04% stake and Karoo’s 10.52% stake in the £832.4m fund, and plans to convert to a REIT after taking control.
The deal, which reflects a 6.7% net initial yield, will be funded by available cash and a share offer to raise gross proceeds of circa £165m.
It plans to issue 351,063,830 shares at 47p a share, although completion of the deal and capital raising is subject to shareholder approval on 9 July.
The group will pay 34.89p for each unit in the Mall Fund – equal to its 31 March 2014 NAV – adjusted for interest rate swap liabilities and estimated performance fees at that date.
In addition, C&R will pay a further £7.4m into escrow in respect of the deduction for performance fees.
The group has also agreed to rebate certain amounts to Aviva in respect of fees payable to the group such that of the amount paid into escrow, the group may recover up to £1.3m depending upon the amount of the ultimate performance fees payable by the Mall Fund.
Capital & Regional said the acquisition “marks a significant step towards completing the group’s strategic objective of focusing on its core UK shopping centre business and positioning itself as the dominant community shopping centre owner in the UK”.
It added that taking control of the underlying assets in the fund would allow the company to drive “compelling returns from the strong cash-generating ability of its shopping centres”.
It plans to spend £60m on the six centres in the fund, and elsewhere continue sales of non-core assets to “further focus the group and reduce leverage”.
bridget.oconnell@estatesgazette.com
