Purchase of Waterside Shopping Centre, Lincoln

Capital & Regional has purchased The Waterside Shopping Centre in the cathedral city of Lincoln, its first property acquisition since its successful capital raising in 2009.

Capital & Regional has acquired The Waterside for £24.8m, at a 7.68% net initial yield, from clients of PRUPIM.

The Waterside has approximately 120,000 sq ft of accommodation on two principal levels, located on a prime retail pitch in the centre of Lincoln.  The centre is anchored by Primark, New Look, Top Shop & Oasis with a Zone A rental tone of £30-£65 and a current void level of 5% .The weighted average unexpired lease term is 7.1 years.

Capital & Regional believes there is latent demand from both retailers without Lincoln representation and those who wish to reformat their existing stores. Waterside presents Capital & Regional with various opportunities to satisfy this demand by undertaking a number of identified initiatives. These range from unit reconfiguration to the conversion of current mall and circulation areas to revenue producing larger space units.

This is an exciting acquisition for Capital & Regional as we move to deliver on our growth strategy for the company

Chief Executive
Hugh Scott-Barratt

There is also planning consent to introduce a Riverside family catering offer at the lower level. It is planned that Waterside will form part of a new 50:50 joint venture between  Capital & Regional and Karoo Investment Fund II (Karoo), a Luxembourg investment Fund. As Capital & Regional and Karoo have some common shareholders the Listing Rules require the Company to obtain shareholder consent for the sale of the 50% interest in the Waterside to Karoo to create the joint venture. It is anticipated that a shareholder circular convening a General Meeting will be sent to shareholders shortly after completion of the acquisition.

It is anticipated that just over half the purchase price will be funded by a new four year non-recourse bank facility, with the balance being met by existing cash resources.

"This is an exciting acquisition for Capital & Regional as we move to deliver on our growth strategy for the company." said Hugh Scott-Barrett, Chief Executive of Capital & Regional.  "Waterside is a classic C&R centre where we can apply our revenue focussed  retail management skills to create the right space and trading environment for retailers and deliver good returns for our shareholders We are pleased to be able to invite Karoo to work with us on this project. The creation of the joint venture with Karoo is also an important step in providing us with further funding capacity for new deals , as well as providing us with a source of management fees and potential performance fees above target returns of at least 15%. We are actively looking at other similarly attractive opportunities."

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