Capital Shopping Centres has attracted a barrage of criticism from investors and analysts over an option to buy two sites from Peel Holdings.
Investors have questioned an agreement to pay €2.5m and a refundable deposit of €7.5m for a three-year option to buy two sites near Malaga in southern Spain to majority shareholder Peel Holdings.
According to analysts at JP Morgan Cazenove, investors called the deal “a sweetener” to the original £1.6bn Trafford Centre deal between CSC and Peel, which gave Peel its close to 25% stake in the shopping centre company.
They also questioned the “true market value” of the option on the Spanish land.
Other investors went further, raising questions about whether Peel boss and CSC deputy chairman John Whittaker was “deliberately depressing the share price so he can take over the company at a lower price, once the clause expires”.
One JP Morgan analyst agreed that “investors are right to be skeptical, as history is not supportive of these types of transactions and time will tell how the numbers stack up”, adding that “a Spanish development is a different animal in the portfolio”.
He agreed that “transactions between shareholder or management teams and the company” are not well-liked, but said Whittaker’s involvement was good for CSC. “From that point of view we give the company the benefit of the doubt,” he added.
Robert Duncan, an equity analyst at Jefferies, said that the deals, which total £13m, “at first seem immaterial, but they are not”.
“The Spanish land option is confusing and we are concerned that CSC risks diluting its core UK franchise investing in a market in which it has no track record through a transaction with its major shareholder,” he said.
One of the Spanish sites has received planning permission for a 860,000 sq ft shopping centre, to include homes, a hotel and petrol station, while the adjacent 14-acre site, called Galvez Land, has also been earmarked for possible future development.
Investor advisory group Pirc said it would be issuing advice to shareholders, which include BlackRock and Simon Property Group, ahead of the general meeting on Friday 17 February.
The deals, which have been recommended by the board, need 50% approval.
bridget.oconnell@estatesgazette.com
