Growthpoint sells its stake in Capital & Regional to NewRiver

Growth Point Properties, a major real estate investment trust in South Africa, has decided to sell its 69% stake in Capital and Regional, a UK-listed company. This decision results from their experience with the COVID-19 pandemic negatively impacting property values. Although the investment has not performed well, the underlying assets remain strong. The company aims to simplify its international investments and focus on maintaining a clearer equity story by reallocating capital. By divesting from the UK market, Growth Point hopes to become more relevant and streamlined in its operations, which currently span Australia, Eastern Europe, and the UK. This strategic move is not a reflection of the assets' quality but rather a step towards optimizing their investment approach.

Growth Point has decided to classify CNR as a non-core asset due to its diminishing significance, representing only 4.6% of total assets and 3.6% of group income. With the goal of reallocating capital towards more promising investments, they plan to sell CNR. Despite this, the offer from New River includes a notable premium of 21% over previous share prices, demonstrating a strategic exit. Growth Point recognizes the investment in CNR did not yield expected returns, especially due to challenges faced during COVID. Selling now allows them to recover some capital and enhance their focus on more valuable projects.

In this discussion, Growthpoint highlights some strategic decisions following a notable transaction involving shares, which brought a 21% premium. The firm aims to simplify its business model and lower its debt levels by divesting non-core assets like its stake in the UK market. Their focus remains on enhancing value through their investments in countries like Australia and involving in global growth initiatives. While there are no immediate major transactions planned, they continue to evaluate the right timing to exit positions that do not align with their core strategy. Ultimately, management sees potential for greater long-term benefits and portfolio improvement post-divestment, emphasizing only keeping meaningful interests that support their growth objectives in the property market.

GrowthPoint Properties is currently evaluating their options regarding their investment in capital and regional assets. Norbert Suss, the group CEO, mentioned that there are no immediate plans or decisions that have been finalized, and they are focused on maximizing the value of their investment. While they are looking into various possibilities, there is no rush or imminent action expected at this time. The conversation emphasizes their cautious approach to handling investments while wanting to ensure they make the most beneficial choices for the company's growth and financial objectives. It highlights the careful consideration that goes into such financial decisions, reflecting a strategy of patience and diligence in evaluating all available options without hasty commitments.