Capital & Regional Regulatory News (CAL)

19 October 2012

Capital & Regional plc

Sale of The Junction Fund

Capital & Regional plc ("the Group") announces that subsidiaries of Hammerson plc have acquired The Junction Fund, in which the Group had a 13.43% interest. The headline price for the properties in the transaction, prior to deductions for rent frees and certain capital expenditure commitments, is £259.5 million (100% of the Fund), or £34.85 million for the Group's share.

The Junction Fund is a specialist retail park fund, owning four retail parks and two separate development sites, which were valued at £266.7 million at 30 September 2012. Capital & Regional was the property and asset manager for the Fund and this role has been terminated as a consequence of the transaction.

For the six months to 30 June 2012 the Group's share of recurring pre-tax profit of The Junction Fund was £0.1 million and the Group's share of gross property assets at that date was £36.4 million. The carrying value of the Group's investment in the Junction Fund was £16.5 million at 30 June 2012. Disposal proceeds including the performance fee received by the Group are expected to be around £14.1 million, but the exact amount is subject to the outcome of certain retentions. £13.1 million of these proceeds were received on completion in cash, with the balance to be paid as the retentions are worked through. The proceeds of the disposal will be used to repay existing debt on the Group's central facility. The disposal is expected to have a minimal impact on recurring profitability.

Morgan Stanley & Co Ltd acted as financial advisor, and Cushman & Wakefield and Wilkinson Williams acted as property advisors to the Junction Fund investors in respect of this transaction.

Hugh Scott-Barrett commented:

"The disposal of our interest in The Junction is an important move in delivering our strategy of exiting non-core assets and degearing to focus on a core portfolio of dominant UK community shopping centres."

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Notes to editors:

About Capital & Regional plc

Capital & Regional is a specialist property company with a track record of developing asset management opportunities in town centre shopping centres and out of town retail parks.

Capital & Regional founded The Mall fund in conjunction with Aviva Investors. Capital & Regional acts as Property and Asset Manager for the Mall and holds 20.1% of the Fund.

Capital & Regional & AREA Property Partners each hold a 50% interest in a German retail property portfolio which is managed by Garigal Asset Management GmbH, in which Capital & Regional holds a 30% interest. 

Capital & Regional also has an 11.9% stake in the X-Leisure fund, which is managed by X-Leisure Limited in which Capital & Regional holds a 50% interest.

Capital & Regional has a number of other joint ventures and wholly-owned properties.

Morgan StanleyMorgan Stanley acted solely for the Junction fund and for no one else in connection with the transaction and will not be responsible to any other party for providing the protections afforded to clients of Morgan Stanley nor for providing advice in relation to the transaction.

For further information see www.capreg.com