Local shopping centre owner Newriver REIT has successfully raised over £50m via a share issue to fund its bid of peer Capital & Regional.
On Wednesday, Newriver REIT announced a possible cash and share offer for Capital & Regional, which would create a shared property portfolio of £890m.
At the same time, Newriver announced the issue of £62.7m shares—just under 20 per cent of its existing issued share capital—to help fund the bid.
The company raised £49.8m by way of a placing with institutional investors at 80p per share, a premium of approximately 0.6 per cent to the closing share price of 79.5p on 18 September 2024. The company also raised £0.4m by way of a retail offer.
The group raised £50.2m overall.
Newriver offered 62.5p per Capital & Regional share, equivalent to around £147m for the entire issued and to be issued ordinary share capital of Capital & Regional—a premium of approximately 21 per ent.
Newriver said that there was a “strong strategic, operational and financial rationale” for the bid, and that both companies would “benefit from enhanced scale, material cost savings… [and] better access to acquisition and asset management opportunities”.
The UK retail real estate sector has had to weather a stormy period in which capital values have dropped, with the MSCI UK Shopping Centres Index declining by 53 per cent between June 2019 and June 2024.
“[The proposed bid] represents a unique opportunity to create a significantly enlarged portfolio at an attractive point in the market cycle,” Newriver said.
The news comes just one week after London-based property investor Praxis pulled out of the running to buy Capital & Regional.
The shopping centre owner announced in May it was looking for a buyer after reporting that the number of people shopping across its properties had risen 1.5 per cent in 2023 to 44.5m visits, reaching close to 87 per cent of pre-pandemic levels.
Capital & Regional owns several UK shopping centres, including in Edinburgh, Hemel Hempstead, Ilford, Maidstone, Walthamstow, Wood Green.
In its most recent full year results for 2023, valuations were up by 2.6 per cent, while net rental income increased by five per cent, both on a like-for-like basis.