Capital & Regional to sell 51% stake to Growthpoint

Johannesburg-listed real estate investment trust Growthpoint Properties has agreed to buy a 51% interest in Capital & Regional for around £150.4m. Growthpoint will first acquire 219.8m existing shares in the UK real estate firm for 33p per share at a total of £72.5m. The second part of the investment will see Growthpoint sign up for 311.5m new Capital & Regional shares at 25p each to raise £77.9m before costs for the firm. At least £50m of the proceeds will be used to reduce leverage, with the balance of proceeds to be used to fund capital expenditure, Capital & Regional said. After the two transactions, Growthpoint will own 51% of Capital & Regional’s enlarged share capital. Growthpoint said it intends to maintain “so far as it is within its control” Capital & Regional’s status as a UK REIT. It expects the deal to complete by the end of 2019. Hugh Scott-Barrett, chairman of Capital & Regional, said the deal would provide “a transformational catalyst” for the growth of the firm. He added: “Not only does it provide a liquidity event for shareholders at a significant premium to the company’s share price prior to this announcement, it also delivers a cash injection of approximately £77.9m that de-risks the business and provides a long-term foundation for growth. This puts Capital & Regional on the front foot by reducing leverage and allowing our strong management team to focus its full attention onto executing its strategy and implementing the roll out of its community centre asset management plan.” Growthpoint chair Francois Marais said: “Growthpoint views its investment in Capital & Regional as an exciting next step in the execution of its internationalisation strategy. Growthpoint’s strategic intent is to support the growth of Capital & Regional in the same way it has done following its investments in GOZ and GW. The result of Growthpoint’s investment in GOZ and GW was a significant improvement in profitability, growth in their property portfolios, both in size and quality, and a value uplift for shareholders.”   To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette