Capital & Regional and NewRiver REIT have reached an agreement on the terms and conditions of a recommended cash and share offer whereby NewRiver REIT will acquire Capital & Regional’s entire issued – and to be issued – share capital for a total of £147 million (or 62.50 pence per Capital & Regional share).
Growthpoint Properties, which owns a 69% shareholding in Capital & Regional, has agreed to dispose of its entire shareholding for £101.4 million.
In the proposed cash and share transaction, each Capital & Regional share would be exchanged for 31.25 pence in cash and 0.41946 new NewRiver shares. For Growthpoint, this would amount to approximately £50.7 million in case and 67.4 million new NewRiver shares, representing an approximate 14% interest in NewRiver, post completion of the transaction.
“We still believe Capital & Regional 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 Capital & Regional,” says Norbert Sasse, Group CEO of Growthpoint Properties.
After receiving unsolicited expressions of interest in Capital & Regional, Growthpoint contemplated disposal with NewRiver’s offer representing a favourable 21% premium to both its closing share price the day before its preliminary expression of interest was received in late May 2024 and three-month volume-weighted average price to the same date.
Like all Capital & Regional shareholders, under the conditions of the offer, Growthpoint will be entitled to the interim dividend declared by Capital & Regional for the six-month period to 30 June 2024 of 2.85 pence per share. On completion of the transaction, it will also be entitled to a further dividend, equivalent to 1.3 pence per Capital & Regional share, paid either by NewRiver or Capital & Regional, 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 Capital & Regional shareholders representing 75% of its shares, with Growthpoint’s approval alone taking this number to nearly 69%.
On completion of the transaction, Capital & Regional will be delisted, and 40.6% of Growthpoint’s property assets by book value will be located offshore.
