LONDON-Capital & Regional plc says that the Mall Fund has completed the disposals of The Gracechurch Centre, Sutton Coldfield, and The Pavilions, Uxbridge, for a combined price of $231 million (£152.5M).
The Gracechurch Centre, Sutton Coldfield was acquired by M&G Real Estate for $133 million (£88M) representing a yield of 7.75%. The Pavilions, Uxbridge was sold to clients of LaSalle Investment Management for $97.5 million (£64.5M), representing an initial yield of 7.70%.
Following these disposals the fund's debt will be reduced to around $579 million (£383) and the proforma LTV to 57%.
These deals mark Capital & Regional's completion of the strategy to jettison non-core shopping centers and shed debt in the Mall Fund to a level that can be refinanced on more attractive terms. The Mall's six remaining assets, comprising over 3 million square feet, are strong business units offering attractive and affordable space, as reflected in their resilience in the latest valuation of June 30.
“The disposal of the two schemes is a key moment in deleveraging The Mall. The sales significantly increase our options for the refinancing of the CMBS,” said Hugh Scott-Barrett, chief executive of Capital and Regional. “We believe that the six remaining centres, with creative asset management from our highly skilled and experienced specialist teams, offer the potential to deliver growth in income and attractive capital returns.”
At the portfolio level, investment yields have remained stable in the quarter, with a small reduction from the March 2013 valuations, largely resulting from the modest discounts at which the sales of Uxbridge and Sutton Coldfield were completed.
Details of the 30 June 2013 valuation are as follows:
| Fund | Valuation of properties | Underlying valuation change in period 1 | Change in unit value (geared) in period | Net initial yield | Unit value at 30 June 2013 | Unit value at 31 March 2013 | C&R % of fund 2 |
| The Mall Fund | $1,254,000,000 | (1.31)% | (2.3)% | 7.03% | $0.05640 | $0.05769 | 20.3% |
1 The underlying valuation change shows the like for like decrease in the value of the portfolio in the quarter as a percentage of the value of the portfolio at the beginning of the period.
2 At 30 June 2013, Capital & Regional owned 191,623,116 units in The Mall Fund.
A full trading update will be provided in the Group's 2013 interim results which will be released in mid-August.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
