Growthpoint Properties Strategically Sells Stake in Capital & Regional to Enhance Global Investments
In a significant move aimed at optimizing its investment portfolio, Growthpoint Properties (JSE: GRT) has conditionally agreed to sell its entire 69% shareholding in Capital & Regional (C&R), a company listed on both the London and Johannesburg Stock Exchanges. C&R is primarily known for its focus on community-centered shopping centers across the UK. This decision is part of Growthpoint’s broader strategy to streamline its operations and enhance international investment opportunities.
According to a statement from Growthpoint’s CEO, Norbert Sasse, this strategic decision is reflective of the company’s long-term vision. “C&R remains an attractive platform with a quality portfolio of assets. However, it has become non-core to our strategic focus,” stated Sasse. He highlighted that C&R currently represents a minor portion—4.6% of total assets by book value—thus making this move a calculated step towards focusing on more integral areas of the business.
The proposed transaction is part of a broader offer initiated by NewRiver REIT, which has agreed to acquire all issued and to-be-issued shares of C&R for a total of GBP 147 million—equating to 62.5 pence per share. For Growthpoint, this translates to approximately GBP 101.4 million. Under the new terms, each C&R share will be exchanged for a combination of cash and NewRiver shares, enabling Growthpoint to retain an interest of around 14% in NewRiver post-transaction.
After receiving unsolicited offers for its stake, Growthpoint recognized the opportunity to elevate the value of its investment. In fact, NewRiver’s offer provides a notable 21% premium compared to previous valuations immediately prior to the announcement, marking a favorable outcome for shareholders.
Once the sale is finalized, shareholders—including Growthpoint—will be eligible for interim dividends announced by C&R. For the six-month period ending June 30, 2024, a dividend of 2.85 pence per share is set to be paid out, further emphasizing the financial benefits of this transaction for existing stakeholders.
With an eye on strengthening its financial position, Growthpoint intends to utilize the proceeds to bolster its balance sheet and pursue future investment opportunities, all while simplifying its operational framework. The closing of this sale is subject to shareholder approval from C&R, which could further influence future asset allocation with an impressive 40.6% of Growthpoint’s property assets positioned offshore upon completion.
In summary, Growthpoint Properties’ divestiture of its stake in Capital & Regional not only aligns with its strategy of business simplification but also opens new avenues for international investment, showcasing an adaptable and forward-thinking approach in a changing market landscape.
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