Capital & Regional, the shopping centre REIT, has reached an agreement with its lenders to restructure and reduce the debt secured over four of its mall assets, including the launch of a fully underwritten open offer to raise £30m.
The facility currently comprises a £265m debt with RBS and TIAA secured over the four mall assets, being the Mall Blackburn, the Mall Maidstone, the Mall Wood Green and the Mall Walthamstow. TIAA currently has a balance outstanding of £165m and RBS has a balance outstanding of £100m.
Under the terms of the Mall Debt Restructuring, Capital & Regional has agreed to acquire the £100m of debt outstanding with RBS for a principal amount of £81m.
It will be funded through a combination of TIAA agreeing to acquire from Capital & Regional £35m of the RBS debt, increasing its lending secured over the Four Mall Assets to £200m; raising of £30m through the open offer at an issue price of 56p on the pro rata basis of 23 Open Offer Shares for every 48 Existing Ordinary Shares held; and around £16.9m of cash currently held on the company’s balance sheet.
The capital raising is being fully underwritten by Growthpoint, the company’s largest shareholder.
The effect of the mall debt restructuring combined with the capital raising would be to reduce the group’s pro forma net loan to value (LTV) as at 30 September 2021 from 61% to around 50% on the basis of the group’s investment assets and central operations or from 72% to 63% on a total group basis.
Under the terms of the mall debt restructuring a waiver of all financial covenants in the mall facility will be provided for two years from the date that the TIAA Real Estate Facility Agreement becomes effective and further modifications made to cash trap covenants for 18 months from the date that such agreement becomes effective.
Assuming rental income returns to a more normalised basis, the company said it was its objective to resume the distribution of cash dividends in respect of the second half of 2022.
Lawrence Hutchings, chief executive, said: “Against the backdrop of a positive reopening of the economy following the disruption caused by the pandemic and increased confidence in our segment of the retail and services market we have been focusing our resources on generating the highest returns from our core Mall investment assets while working closely with our lenders towards both restructuring and reducing the group’s debt.
“These proposed transactions, which will recapitalise the balance sheet, allow us to achieve just that and represent a significant and positive step forward for the group. They will allow us to once again focus fully on continuing our repositioning and merchandising, while looking at how we can best leverage the expertise in our platform and, in due course, the reintroduction of cash dividends.”
CAL : Capital & Regional restructures debt and launches open offer