Cap & Reg sells three Mall shopping centres for EUR 362m

The Mall Fund, managed by UK property asset manager Capital & Regional, announced that it has agreed to sell three properties to Carlyle Group for £286mln (EUR 362mln). The three Mall shopping centres in Chester, Epsom and Edgware were valued at £339.8mln at the end of March 2008. The price agreed represents an initial yield of 6.0%. The proceeds from the sale, which will complete in early July, will be available to reduce gearing in the fund.

The company also said that the £286.3mln open offer by Mall Unit Trust had been approved by a majority of 97%. The bulk of the proceeds raised will be used to repay the Funds existing bank debt. The open offer is expected to complete on 27 June.

Hugh Scott-Barrett, Chief Executive of Capital & Regional, commented, ' This transaction, together with the capital raising, puts the Mall Fund on a more secure financial footing and will allow us to focus on maximising fund performance through the active management of the asset portfolio.'

Although the company voted in favour of the capital raising it decided not to take up its rights. According to the company statement, ' Capital & Regional remains committed to the Mall and its franchise both as an investor and as a manager.' Following the transaction, its stake in the Mall Unit Trust will be 16.7% compared with 24.2% previously. Based on 31 May values, the effect of the dilution and associated costs result in a reduction in pro forma net assets of approximately 60 pence per share.

The statement added offering unit holders a vote in 2011 on whether to extend the fund beyond 2012, when its bonds are due for repayment, 'is a logical step.'

The company has also agreed to bring forward from December 2009 the repayment of approximately £25mln in net performance fees to ensure that existing unit holders receive the benefit of clawback. These will now be paid by the end of this year.