Growthpoint simplifies its business as it agrees to sell its stake in Capital & Regional to NewRiver.
25 September 2024 : Growthpoint Properties (JSE: GRT) has conditionally agreed to dispose of its entire 69% shareholding in Capital & Regional (C&R), which is dual-listed on the London Stock Exchange and the Johannesburg Stock Exchange and invests primarily in UK community-focused shopping centres. The proposed disposal reflects Growthpoint’s strategy to simplify its business and optimise its international investments.
Growthpoint’s disposal decision forms part of a broader transaction in progress whereby NewRiver REIT, which also invests in UK shopping centres, has announced its offer to buy all the issued and to-be-issued C&R shares for a total of GBP147 million (or 62.5 pence per C&R share), of which Growthpoint would receive GBP101.4 million.
In the proposed cash and share transaction, each C&R share would be exchanged for 31.25 pence in cash and 0.41946 new NewRiver shares. For Growthpoint, this would amount to approximately GBP50.7 million in cash and 67.4 million new NewRiver shares, representing an approximately 14% interest in NewRiver, post the completion of the transaction.
Commenting on the proposed disposal, Norbert Sasse, Group CEO of Growthpoint Properties, says, “We still believe C&R is an attractive platform with a high-quality portfolio of assets and strong prospects. However, it has become non-core to our group-wide strategic focus, representing 4.6% of total assets by book value and 3.6% of total distributable income. Given our aim of simplifying the business and optimising our international portfolio, we have clearly stated that we were evaluating all options to maximise the value of our investment in C&R.”
After receiving unsolicited expressions of interest in C&R, Growthpoint contemplated disposal, and NewRiver’s offer represents a favourable 21% premium to both its closing share price the day before its preliminary expression of interest was received on 23 May 2024 and the three-month volume-weighted average price to the same date.
Like all C&R shareholders, under the conditions of the offer, Growthpoint will be entitled to the interim dividend declared by C&R for the six-month period to 30 June 2024 of 2.85pps, expected to be paid on 27 September 2024. On completion of the transaction, it will also be entitled to a further dividend, equivalent to 1.3 pence per C&R share, paid either by NewRiver or C&R, depending on the effective date of the transaction.
Growthpoint will use the cash proceeds to strengthen its current balance sheet and position it to pursue investment opportunities in line with its communicated strategy. It may consider selling down its NewRiver shares in due course in line with its drive to simplify its business and optimise its international investments.
The transaction remains subject to the usual conditions, including the approval of C&R shareholders representing 75% of its shares, with Growthpoint’s approval alone taking this number to nearly 69%.
On completion of the transaction, C&R will be delisted, and 40.6% of Growthpoint’s property assets by book value will be located offshore.
