Shopping centre owner Capital & Regional is in talks to sell a majority stake to South African property firm Growthpoint as the Johannesburg-based company takes advantage of weak UK retail property prices.
Shares in Capital & Regional, which owns eight malls across the UK including Walthamstow, Wood Green and Ilford, rose more than 10 per cent after the potential deal came to light today.
The deal would involve a partial cash offer for Capital & Regional shares and a capital injection to support its strategy through a subscription for new shares.
The companies said there “can be no certainty” that an offer will be made, but a further announcement will be made “as appropriate”.
Capital & Regional reported that contracted rent declined £1.2m from June last year to £61.1m as new leasing agreements failed to offset the impact of retailer restructurings.
Four company voluntary arrangements (CVAs) – Debenhams, Arcadia, Monsoon Accessorize and Select – have impacted the firm’s portfolio.
Read more: UK recovery boosts Capital & Regional
Debenhams rent cuts have hit the firm the hardest, resulting in a net rental income reduction of around £700,000 in the second half of the year and £1.3m on an annualised basis.
Chief executive Lawrence 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.”