Capital & Regional (CAL) is a UK focused REIT with a portfolio of in-town community shopping centres. It is buying The Gyle Shopping Centre in Edinburgh for £40m. To fund that it is using existing funds, a new debt facility of £16m, and approximately £25m of gross proceeds that it expects from a fully underwritten open offer of its shares (see further detail below). It has already put down a £1m non-refundable deposit. The company says that the acquisition of The Gyle Shopping Centre is expected to deliver significant earnings enhancement in the first full year of ownership.
The centre
- The Gyle Shopping Centre is a well-established and designed community shopping centre with 88 units, anchored by a Marks & Spencer store incorporating a new 15,000 square foot food hall and Morrisons supermarket. The centre is located six miles west of Edinburgh city centre in a mixed-use area. The centre directly serves two large affluent residential areas which lie to the north and east of the property as well as the commercial areas of South Gyle and Edinburgh Park which are to the south and west.
- Capital & Regional feels that the property will require minimal immediate capital expenditure but the company anticipates that there is a clear medium-term opportunity for significant value add initiatives from the company’s existing resources and from utilising the group’s expertise.
- The property’s retail space is let at approximately £6.8m of annual gross rent, which translates into approximately £5.77m of net rental income, with strong rent collection and headline occupancy of 94% as well as a weighted average unexpired lease term of 2.1 years.
- The asset is being acquired at a net initial yield of 13.51% that is expected to rebase to around 12%.
- Total footfall in 2022 was 8.6m.
- The property has 2,800 free car parking spaces and directly serves two large affluent residential areas, as well as the commercial areas of South Gyle and Edinburgh Park. It is also served by the tram system which links the nearby airport to Edinburgh City centre, further improving access and footfall.
The open offer
- The company is proposing to raise proceeds of approximately £23.4m (net of fees, costs and expenses) by way of an open offer of 46,278,681 shares.
- The 54p issue price represents a 5.43% discount to the last closing price of 57.1p.
- Qualifying shareholders are being given an opportunity to apply for shares on the basis of 4 open offer shares for every 15 existing shares held.
CAL : Capital & Regional raising cash to fund Gyle shopping centre purchase