South African REIT in talks for majority stake in Capital & Regional

Growthpoint Properties, South Africa’s largest listed REIT, is in discussions to buy a majority stake in community shopping centre landlord Capital & Regional. Talks involve a combination of a partial offer in cash for C&R shares and an injection of capital to support the company’s strategy through a subscription for new C&R shares. Lawrence Hutchings, chief executive of C&R, said the board has deferred a decision on the level of its forthcoming interim dividend “until such process has concluded”. In a separate statement, Growthpoint said it had until 9 October to submit a formal bid. C&R is listed on the main market of the London Stock Exchange, and has a secondary listing on the Johannesburg Stock Exchange. The news comes as C&R issues its half-year results. Its EPRA NAV per share stood at 52p during the six months to June 2019, compared with 65p in the previous year. Its property valuation was £797.3m at 30 June. Net of capex spent in the period of £5.9m, including tenant incentives, resulted in a revaluation loss on wholly-owned assets of £63m. Contracted rent tallied £61.1m, dipping by 1.9%. New letting activity was partially offset by retailer CVAs and administrations. Hutchings said: “We have been making solid progress to strengthen the balance sheet and provide additional liquidity given the fall in valuations, due primarily to the impact of CVAs and retailer administrations and market yield shift, which has increased net LTV to 52%. “In August we conditionally exchanged on the sale of non-core land at Wood Green which is due to realise £5m. We have also reached an advanced stage in the identification of a preferred development partner to fully fund and build out the circa 450-apartment scheme at Walthamstow that was consented in the second half of 2018. “This creates the potential to realise, subject to planning, a capital receipt of approximately £20m during 2020 and has provided further confidence and read through to the residential opportunity at Ilford, which we believe could be in excess of the 200-apartment scheme currently consented. “Furthermore, we have agreed terms on a 12-month amendment to our Luton facility which provides greater headroom. This follows the previous amendments to our Hemel Hempstead and group revolving credit facilities earlier in the year to support ongoing capex projects.”   To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette