UK-based shopping centre specialist Capital & Regional granted permission for secondary listing on the JSE

Posted On Tuesday, 29 September 2015 13:16 Published by
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Capital & Regional is granted permission to take up a secondary listing on the JSE, exposing South African investors to a property portfolio worth about GBP1bn or R21bn.

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Capital & Regional, a specialist owner of UK-based community shopping centres, has been granted permission to take up a secondary listing on the JSE, exposing South African investors to a property portfolio worth about £1bn (R21bn).

The company, which specialises in dominant community retail and leisure centres in towns in the UK, will be the latest of several real estate investment trusts to list this year. Listed property has been the most active sector on the JSE in 2015, with more than R20bn having been raised so far.

The group owns six shopping centres, known as the mall portfolio, and joint-venture interests in two further centres in Redditch and Ipswich, with stakes of 20% and 50%, respectively.

The company, which has a market capitalisation of £469.5m, is listing in order to cater for the demand from South African institutions for exposure to sizeable assets. In the past, it has not been a highly liquid fund, which is partly why it plans to list on the JSE’s main board.

“South African investors have bought into Capital & Regional in the past and we believe significant demand has been generated for the fund. We feel that by broadening our asset investor base, we will also be able to inject liquidity into the fund,” chief financial officer Charles Staveley said yesterday.

The fund differed from players such as JSE-listed and UKbased Intu Properties, he said.

“Intu’s rent charges are typically higher than ours. That’s because they own top-tier malls, while we believe we are dominating the second-tier, community centre space.”

Kundayi Munzara, a director at Sesfikile Capital, said Capital & Regional would be an attractive and well-timed listing for the Johannesburg bourse.

“Capital & Regional’s approval to have its secondary listing on the JSE adds another sizeable R10bn to the local listed sector and provides investors another avenue to invest in companies with underlying earnings that come from offshore hard currency assets,” he said.

“The timing is probably right, given an improving UK retail market even in secondary centres outside London. For larger institutional investors, the key stumbling block has been a lack of liquidity in Capital & Regional, but we are hopeful this may improve over time after the JSE listing,” said Mr Munzara.

Capital & Regional’s share has rallied about 28% in pound terms this year, the second-best performance among listed property companies in the UK. Unite Group tops the list.

Despite this, Mr Munzara said the company was still trading cheaply at a historic net asset value of 67p a share at the end of June and at a forward yield of 4.8%, which he said represented good value.

“Earnings growth is expected to be in the region of 6% over the next two years,” he said.

Source Business Day

Last modified on Tuesday, 29 September 2015 15:09

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