Cap & Reg exits Germany to refocus on the UK

UK investor Capital & Regional has exchanged contracts to sell its 50/50 German joint venture with Ares Management to clients and funds under management of Rockspring Property Investment Managers.

Upon completion, the sale will represent the last major step in Capital & Regional's stated strategy of refocussing its business on dominant UK shopping centres, the future REIT said in a statement.

The transaction values the joint venture at €105 mln or €52.5 mln for the company's 50% share. This is expected to be in line with the year-end NAV and compares to a net equity value of €50.3 mln at 30 June 2014.

As part of the transaction the company will retain for up to five years a small minority stake in each of the German portfolios expected to be valued at €2 mln in total. After transaction costs and the positive impact of currency hedging arrangements the company expects the net cash proceeds to ultimately be £43 mln.

The German joint venture consists of 23 properties held in five separate portfolios largely anchored by national food retailers and comprising over 200 units. For the six months to 30 June 2014 the Group's share of recurring pre-tax profit of the German joint venture was £3.1 mln and the Group's share of gross property assets at that date was £141.8 mln.

Completion is subject to conditions including a material adverse change provision specific to the business and on German regulatory approval being obtained.