Capital Shopping Centres has today announced a $600m share deal, offloading its US subsidiary Capital and Counties USA.
US property group Equity One will buy the company in a joint venture agreement.
Evolution Securities analyst Paul Pulze has given his take on the transaction saying it had been anticipated by the market since the start of this year.
He says:
EVO TAKE – The transaction has been anticipated by the market since early this year and the completion of a transaction comes as no surprise. We are interested by management’s comments of retaining a stake to be able to “participate in the significant growth potential” as we had expected a complete disposal of the assets. As the assets represented only around 8% of the CSC pro-forma portfolio at end-December, we do not expect a material impact on the company.
DETAILS – CSC has completed a transaction with Equity One, a US REIT, to enter a JV which will acquire CSC’s US subsidiary. CSC will receive 4.1m shares in Equity One and a further 10.9m JV units. CSC may redeem its JV units for cash or Equity One stock (on a one-for-one basis) at the option of Equity One. Equity One’s closing price was $17.22, which reflects a transaction value of $70.6m of initial Equity One stock and a further $187.7m for the JV stake at the current price.
VALUATION AND RECOMMENDATION – The shares trade at 19% discount to our Dec-10E NAV and provide a 4.8% dividend yield. We maintain our Reduce rating on the shares