REG - Capital & Regional NewRiver REIT plc - Statement re Possible Offer for Capital & Regional
18/09/2024 16:45
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RNS Number : 7536E Capital & Regional plc 18 September 2024
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INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO
CERTAINTY THAT ANY FIRM OFFER WILL BE MADE NOR AS TO THE TERMS ON WHICH ANY
FIRM OFFER MIGHT BE MADE
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS, PROSPECTUS
EQUIVALENT DOCUMENT OR SCHEME DOCUMENT
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
18 September 2024
POSSIBLE CASH AND SHARE OFFER
by
NEWRIVER REIT PLC
for
CAPITAL & REGIONAL PLC
proposed to be effected by means of a Scheme of Arrangement under Part 26 of
the Companies Act 2006
1. INTRODUCTION
Further to the announcement made by NewRiver REIT plc ("NewRiver") on 23 May
2024 in relation to a possible offer by NewRiver for Capital & Regional
plc ("Capital & Regional"), the boards of NewRiver and Capital &
Regional are pleased to announce the principal terms and conditions of a
possible cash and share offer for Capital & Regional pursuant to which
NewRiver would propose to acquire the entire issued and to be issued share
capital of Capital & Regional (the "Possible Offer").
2. THE POSSIBLE OFFER
Under the terms of the Possible Offer (the "Possible Offer Terms"), Capital
& Regional Shareholders would be entitled to receive:
for each Capital & Regional Share · 31.25 pence in cash; and
· 0.41946 New NewRiver Shares
On the basis of the Closing Price per NewRiver Share of 74.5 pence on 22 May
2024 (being the last Business Day before the Offer Period commenced (the
"Offer Period Last Practicable Date")), the Possible Offer Terms imply a value
of 62.5 pence per Capital & Regional Share and approximately £147 million
for the entire issued, and to be issued, ordinary share capital of Capital
& Regional, which represents a premium of approximately:
· 21 per cent. to the undisturbed Closing Price of a
Capital & Regional Share of 51.5 pence on the Offer Period Last
Practicable Date;
THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CODE AND DOES NOT
CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7
OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE NOR AS
TO THE TERMS ON WHICH ANY FIRM OFFER MIGHT BE MADE
· 21 per cent. to the three-month VWAP of 51.7 pence per
Capital & Regional Share on the Offer Period Last Practicable Date; and
· 18 per cent. to the six-month VWAP of 53.0 pence per
Capital & Regional Share on the Offer Period Last Practicable Date.
Under the Possible Offer Terms, Capital & Regional Shareholders would, in
aggregate, receive approximately 98,527,475 New NewRiver Shares and,
immediately following completion of the Combination, would own approximately
21 per cent. of the issued ordinary share capital of NewRiver (based on the
existing issued ordinary share capital of NewRiver and the issued and to be
issued ordinary share capital of Capital & Regional as at 17 September
2024, being the last Business Day prior to the date of this announcement (the
"Last Practicable Date")).
In addition, pursuant to the Possible Offer Terms:
· Capital & Regional Shareholders would be entitled
to receive and retain an interim dividend declared by Capital & Regional
in respect of the six month period to 30 June 2024, which is expected to be
paid to entitled Capital & Regional Shareholders on 27 September 2024,
with such dividend not to exceed an amount of 2.85 pence per Capital &
Regional Share (the "Capital & Regional Interim Dividend");
· Capital & Regional Shareholders would, once they have become
NewRiver Shareholders following completion of the Combination, be entitled to
receive an interim dividend to be declared by NewRiver in respect of the six
month period to 30 September 2024, which is expected to be declared in
November 2024 and paid to NewRiver Shareholders on the register of members of
NewRiver on a record date to be set after the expected record time for the
Scheme to effect any Combination (the "Scheme Record Time"), with such interim
dividend to be in an amount of not less than 3.0 pence per NewRiver Share (the
"NewRiver Interim Dividend"). Therefore, Scheme Shareholders who retain their
New NewRiver Shares following completion of any Combination, and at the record
date to be set for the NewRiver Interim Dividend (assuming such record date
falls after the expected Scheme Record Time), would receive the NewRiver
Interim Dividend; and
· if the record date for the NewRiver Interim Dividend
is a date prior to the Scheme Record Time, Capital & Regional would
declare and pay, prior to the Scheme Record Time, a further interim dividend
of 1.3 pence per Capital & Regional Share which Capital & Regional
Shareholders would be entitled to receive and retain (the "Capital &
Regional Additional Dividend").
If, on or after the date of this announcement and on or prior to the date on
which any Combination becomes effective, Capital & Regional announces,
declares, makes or pays:
· any dividend, distribution or form of capital return in excess of
the Capital & Regional Interim Dividend;
· in the event that the record date for the NewRiver Interim
Dividend is a date prior to the Scheme Record Time, any dividend, distribution
or form of capital return in excess of any Capital & Regional Additional
Dividend; and/or
· any other dividend, distribution or form of capital return,
(each a "Capital & Regional Additional Distribution"), Capital &
Regional Shareholders would be entitled to receive and retain such Capital
& Regional Additional Distribution but NewRiver would be entitled to
reduce the consideration payable pursuant to the Possible Offer Terms by an
amount equivalent to all or any part of such Capital & Regional Additional
Distribution.
It is proposed that the cash consideration payable by NewRiver pursuant to the
Possible Offer Terms would be funded from NewRiver's existing cash resources
and the net proceeds of the Placing. The cash consideration payable pursuant
to the Possible Offer Terms would be priced in pounds sterling but Capital
& Regional Shareholders on Capital & Regional's South African Register
would, as is required as a consequence of Capital & Regional's secondary
listing on the JSE, receive any cash consideration due to them under the
Possible Offer Terms (as well as any Capital & Regional Additional
Dividend) in South African Rand. The Scheme Document would include further
details in relation to these currency exchanges. Further details in respect of
the proposed treatment of Capital & Regional Shareholders who hold their
Capital & Regional Shares on Capital & Regional's South African
Register would also be set out in the Scheme Document.
Any firm offer, if made, would constitute a "significant transaction" for
NewRiver for the purposes of the UK Listing Rules.
The announcement of any firm intention to make an offer for Capital &
Regional by NewRiver under Rule 2.7 of the Code is subject to the satisfaction
or waiver of a number of customary pre-conditions, including, amongst other
things, finalisation of binding transaction documentation and the Placing,
waivable at NewRiver's discretion. There can be no certainty that any firm
offer will be made, even if the pre-conditions are satisfied or waived. A
further announcement will be made in due course.
For the purposes of Rule 2.5(a) of the Code, NewRiver reserves the right to
make a firm offer for Capital & Regional on less favourable terms than the
Possible Offer Terms:
· with the agreement or recommendation of the Capital
& Regional Board; or
· if a third party announces (after the date of this
announcement) a firm intention to make an offer under Rule 2.7 of the Code or
a possible offer under Rule 2.4 of the Code for Capital & Regional which,
at that date, is of a value less than the value implied by the Possible Offer
Terms; or
· following the announcement of a whitewash
transaction pursuant to the Code.
In addition, NewRiver reserves the right to introduce other forms of
consideration and/or vary the mix or composition of consideration of any firm
offer, if made.
In accordance with Rule 2.6(a) of the Code, NewRiver is required, by not later
than 5.00 p.m. (UK time) / 6.00 p.m. (SA time) on 26 September 2024, either to
announce a firm intention to make an offer for Capital & Regional in
accordance with Rule 2.7 of the Code or announce that it does not intend to
make an offer for Capital & Regional, in which case the announcement will
be treated as a statement to which Rule 2.8 of the Code applies.
In accordance with Rule 2.6(c) of the Code, the above deadline may be extended
further at the request of the Capital & Regional Board and with the
consent of the Panel.
In accordance with Rule 2.6(d), this deadline will cease to apply if any third
party has announced a firm intention to make an offer for Capital &
Regional.
There can be no certainty that any firm offer will be made for Capital &
Regional, nor as to the terms on which any offer, if made, will be made.
Any firm offer, if made, would be subject to the approval of Capital &
Regional Shareholders and NewRiver Shareholders would also be required to
approve certain resolutions connected with the allotment and issue of the New
NewRiver Shares to Capital & Regional Shareholders pursuant to the
Possible Offer Terms at a general meeting of NewRiver Shareholders.
3. RATIONALE FOR THE POSSIBLE OFFER
NewRiver is a leading real estate investment trust specialising in buying,
managing and developing retail assets throughout the UK. Its community
shopping centres and conveniently located retail parks are occupied by tenants
predominantly focused on providing essential goods and services. Alongside its
balance sheet assets, and in order to leverage its high-quality retail asset
management platform, NewRiver also has a Capital Partnership business, which
generates recurring fee income by providing asset management services to a
high quality roster of institutional, private equity and public sector
partners. NewRiver's objective is to own and manage the most resilient retail
portfolio in the UK, focused on core shopping centres, retail parks, and
regeneration opportunities in order to deliver long term attractive recurring
income returns and capital growth for its shareholders.
Capital & Regional is a UK-focused retail property REIT specialising in
shopping centres serving the non-discretionary and value-orientated needs of
their local communities. It has a track record of delivering value enhancing
retail and leisure asset management opportunities across a portfolio of
tailored in-town community shopping centres. Capital & Regional is listed
on the Main Market of the London Stock Exchange and has a secondary listing on
the Main Board of the Johannesburg Stock Exchange, with gross assets of £350
million at 30 June 2024 (based on the property valuation report on Capital
& Regional's portfolio prepared by Knight Frank, as set out in Part C of
Appendix 2 to this announcement) and a market capitalisation of approximately
£144 million as at the Last Practicable Date.
The NewRiver Board believes that there is a strong strategic, operational and
financial rationale for the Combination and that the Combined Group would
benefit from enhanced scale, material cost savings, mid- to high-teens
accretion to UFFO per share, better access to acquisition and asset management
opportunities, improved debt optionality, expected cost of capital benefits
and the potential for increased share liquidity.
Following a challenging period for the UK retail real estate sector, in which
capital values have materially rebased, with the MSCI UK Shopping Centres
Index declining by 53 per cent. between June 2019 and June 2024, the NewRiver
Board believes the Combination represents a unique opportunity to create a
significantly enlarged portfolio at an attractive point in the market cycle.
In particular, the NewRiver Board believes that the Combination would have the
following benefits for the Combined Group:
· Combination of high-quality, complementary assets -
Capital & Regional's portfolio comprises six community shopping centres
predominantly located in London and South East England and principally let to
low-risk, essential and value-oriented retailers that are highly complementary
to NewRiver's existing portfolio. Both portfolios comprise retail assets that
are well-located to satisfy convenience-led shopping by an attractive customer
base, with over 70 per cent. of shoppers in both NewRiver's and Capital &
Regional's assets travelling less than five miles and over 55 per cent. of
shoppers having above average post-tax net incomes. NewRiver believes that the
disposal of non-core assets in recent years and the acquisition of The Gyle in
Edinburgh in September 2023 have enhanced the quality and complementary nature
of Capital & Regional's remaining portfolio;
· Creation of a c. £0.9 billion retail
portfolio - the Combined Group would have a portfolio focused on community
shopping centres and retail parks, generating annualised rent of approximately
£90 million, valued in aggregate at c. £889 million (based on the property
valuation reports for NewRiver prepared by Knight Frank and Colliers, as set
out in Parts A and B of Appendix 2 to this announcement and the property
valuation report on Capital & Regional's portfolio prepared by Knight
Frank, as set out in Part C of Appendix 2 to this announcement) (comprising 47
assets) and with assets under management of c. £2.4 billion (comprising 84
assets);
· Low-risk tenant profile with an attractive income profile
and opportunities to add value - the Combined Group's portfolio would benefit
from complementary low-risk tenant bases with low levels of tenant
concentration. Approximately 87 per cent. of Capital & Regional's retail
tenant base by rent is comprised of retail tenants focused on value and
essential goods and services, comparable to approximately 80 per cent. of
NewRiver's retail tenant base. The Combined Group's portfolio risk profile
would be aligned with UK retail and industrial sector averages, by reference
to the projected cumulative tenant probability of failure, with the benefit of
a material yield premium and with an equivalent yield of approximately 8.5 per
cent. compared to the UK retail and industrial sector averages of 6.8 per
cent. and 6.1 per cent., respectively. With an affordable occupational cost
ratio of c. 8.8 per cent. and strong in-store sales growth, the combined
portfolio would be well-positioned for future rental growth, supported by
ongoing asset management opportunities within Capital & Regional's
portfolio, such as increasing occupancy and improving gross-to-net ratios;
· Material cost savings and significant earnings
accretion - the Combination would be expected to unlock approximately £6.2
million of net pre-tax run-rate recurring annual cost synergies, the majority
of which would be expected to be effective shortly following completion of the
Combination with the full benefit of the synergies from the Combination
expected to be unlocked within 12 months of completion of the Combination on
an annualised basis. These cost savings would be expected to arise from the
removal of duplicative functions and the rationalisation of listing and other
administrative and operational expenses, as outlined in the Quantified
Financial Benefits Statement set out in this announcement. The Combination
would be expected to generate a strong income return and mid- to high-teens
accretion to UFFO per share, enhancing the Combined Group's ability to pay a
materially higher, covered dividend;
· Balance sheet strength maintained and debt
maturity profile diversified - the Combined Group would seek to preserve a
robust and conservatively leveraged balance sheet in line with NewRiver's
existing LTV guidance. On completion of the Combination, the Combined Group
would benefit from a weighted average cost of 3.5 per cent. across drawn debt
of £444 million with no maturity on drawn debt until January 2027 as well as
continuing to benefit from substantial available liquidity, improved debt
optionality and expected cost of capital benefits resulting from the increased
scale of the Combined Group; and
· Increased share liquidity with expanded shareholder base -
the Combination would create an enlarged REIT with enhanced equity market
profile and a broader shareholder base, with shareholders benefitting from the
potential for increased share liquidity and larger weightings in key indices.
Portfolio valuations
NewRiver and its advisers have carried out extensive due diligence on Capital
& Regional's real estate portfolio and operations. This has included, but
is not limited to, a detailed review of corporate, real estate and other
information provided by Capital & Regional, site visits, sessions with
Capital & Regional's senior management, rigorous internal valuation work
and the commissioning of Knight Frank, which values the majority of NewRiver's
existing portfolio, to conduct an external valuation of the Capital &
Regional portfolio in accordance with the latest version of the RICS Valuation
- Global Standards (the "Red Book"). Knight Frank's external valuation report
on Capital & Regional's portfolio, which is unqualified and has been
prepared in accordance with the requirements of Rule 29 of the Code by a
valuer who has had access to sufficient information to prepare such report, is
disclosed in Part C of Appendix 2 to this announcement.
In particular, the NewRiver Board has focused on understanding the impact of
any Combination and, in particular, the potential acquisition of Capital &
Regional's property portfolio, on the Combined Group's balance sheet and
related financial metrics. Taking into account the Knight Frank valuation, the
NewRiver Board has determined that a valuation for NewRiver's financial
reporting purposes would be £350 million. The NewRiver Board recognises that
this is different to the Red Book valuation provided by CBRE, as set out in
Part D of Appendix 2 to this announcement. It is recognised that real estate
valuations, and the assumptions underlying them, are in some cases subjective
and that differences of opinion can and do occur between valuers. NewRiver
does not contest the factual accuracy of CBRE's and Knight Frank's valuations
or the reasonableness of the assumptions adopted by either valuer.
However, given that, in the event that a transaction were to be concluded, it
would be the intention that Knight Frank would conduct independent valuations
of the Capital & Regional assets on behalf of NewRiver for future
financial reporting purposes, the NewRiver Board believes it appropriate to
incorporate the Knight Frank valuation when analysing the Combined Group's
balance sheet and related financial metrics.
4. QUANTIFIED FINANCIAL BENEFITS STATEMENT
The NewRiver Directors, having undertaken a review and analysis of the
potential cost savings of the Combined Group, as well as taking into account
factors they can influence, believe the Combined Group could deliver
shareholder value through the expected realisation of approximately £7.3
million of gross pre-tax run-rate recurring annual cost synergies. These would
be expected to be realised primarily from consolidation of:
· board, senior management, central and support
functions and savings related to Capital & Regional's status as a publicly
traded company (which would no longer be required on a standalone basis),
together with third party support, including professional advisory fees, which
would be expected to contribute approximately 85 per cent. (approximately
£6.2 million) of the gross pre-tax run-rate recurring annual cost synergies;
and
· head office and other operating infrastructure such as
technology and IT, which would be expected to contribute approximately 15 per
cent. (approximately £1.1 million) of the gross pre-tax run-rate recurring
annual cost synergies.
Potential areas of dis-synergy have been considered by the NewRiver Directors,
with the principal area of dis-synergy being income generated from property
management services (equating to approximately £1.1 million per annum), which
is assumed to cease on completion of any Combination because Capital &
Regional provides these services to tenants but NewRiver would intend to align
this approach with its existing portfolio whereby these services are provided
by a third party specialist. Potential cost savings associated with the
outsourcing of these services have been reflected in the expected recurring
cost synergy figure.
Accordingly, the NewRiver Directors believe that the Combined Group could
deliver approximately £6.2 million of net pre-tax run-rate recurring annual
cost synergies.
The majority of the above cost synergies would be expected to be effective
shortly following completion of the Combination and it is expected that the
full benefit of the synergies would be unlocked within 12 months of completion
of the Combination on an annualised basis.
The identified cost savings would be contingent on the completion of the
Combination and would not be achieved by either NewRiver or Capital &
Regional independently. The estimated cost synergies referred to above reflect
both the beneficial elements and the relevant costs.
The NewRiver Directors have considered one-off costs in connection with
realising the expected cost synergies and estimated these to be approximately
£2.9 million, which would predominantly be incurred in the first 12 months
following completion. For the avoidance of doubt, this approximate £2.9
million is not factored into the £6.2 million of net pre-tax run-rate
recurring annual cost synergies referred to above.
These statements of estimated cost savings and synergies relate to future
actions or circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a consequence, in the event that any firm offer were to
be made and any Combination effected, the identified synergies and estimated
savings referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. For the purposes of Rule 28 of the Code, the statements of
estimated cost savings and synergies contained in this announcement are solely
the responsibility of NewRiver and the NewRiver Directors. Any statement of
intention, belief or expectation for the Combined Group following any
Combination becoming effective is also an intention, belief or expectation of
the NewRiver Directors and not of the Capital & Regional Directors.
These statements are not intended as a profit forecast and should not be
interpreted as such. No part of these statements, or this announcement
generally, should be construed or interpreted to mean that the Combined
Group's earnings in the first year following any Combination becoming
effective, or in any subsequent period, would necessarily match or be greater
than or be less than those of NewRiver and/or Capital & Regional for the
relevant preceding financial period or any other period.
Appendix 3 to this announcement includes a copy of these statements of
anticipated cost savings and synergies arising from a Combination and provides
underlying information and bases of belief and calculation.
Appendix 3 to this announcement also includes reports from NewRiver's
reporting accountant, BDO, and its lead financial adviser, Jefferies, in
connection with the anticipated Quantified Financial Benefits Statement, as
required pursuant to Rule 28.1(a) of the Code, and provides underlying
information and bases of belief. Jefferies, as lead financial adviser to
NewRiver, has provided such report for the purposes of the Code stating that,
in its opinion and subject to the terms of its report, the Quantified
Financial Benefits Statement, for which the NewRiver Directors are
responsible, has been prepared with due care and consideration.
Further information on the bases of belief supporting the Quantified Financial
Benefits Statement, including the principal assumptions and sources of
information, is set out in Appendix 3 to this announcement.
Each of BDO and Jefferies has given and not withdrawn its consent to the
inclusion of its report on the Quantified Financial Benefits Statement in
Parts B and C, respectively, of Appendix 3 to this announcement.
5. THE INDEPENDENT CAPITAL & REGIONAL DIRECTORS' VIEWS
ON THE POSSIBLE OFFER
Norbert Sasse and Panico Theocharides, non-executive directors of Capital
& Regional, are Growthpoint's nominated representatives on the Capital
& Regional Board. As noted below, Growthpoint, in its capacity as Capital
& Regional's largest shareholder, would be fully supportive of a firm
offer made for Capital & Regional by NewRiver in line with the Possible
Offer Terms, if made, and, accordingly, has irrevocably undertaken to vote, or
procure the vote, in favour of the Scheme at the Court Meeting and of the
Capital & Regional Resolution(s) to be proposed at the Capital &
Regional General Meeting (or, in the event that any Combination would be
implemented by way of a Takeover Offer, to accept, or procure the acceptance
of, such Takeover Offer). As a result of this, and of Growthpoint's interest
in Capital & Regional, Norbert Sasse and Panico Theocharides have not
participated in the Capital & Regional Directors' deliberations in
relation to the proposal put to them in relation to the Possible Offer by
NewRiver.
The Independent Capital & Regional Directors believe that a Combination
would bring together two high-quality, complementary portfolios of
community-focused shopping centres and retail parks capable of achieving
significant strategic, operational and financial benefits as follows:
· by establishing a c. £0.9 billion (based on the property
valuation reports for NewRiver prepared by Knight Frank and Colliers, as set
out in Parts A and B of Appendix 2 to this announcement and the property
valuation report on Capital & Regional's portfolio prepared by Knight
Frank, as set out in Part C of Appendix 2 to this announcement) retail
portfolio of 29 shopping centres, and 13 retail parks, with Capital &
Regional Shareholders benefiting from increased geographic and tenant
diversification from the NewRiver portfolio;
· providing Capital & Regional Shareholders with exposure to
retail parks, where vacancy rates and rental growth are being driven by robust
occupational demand;
· providing Capital & Regional Shareholders with
significantly enhanced scale which should have the following benefits:
o improved share liquidity, with a significantly improved free float and
diversified shareholder base;
o access to cheaper and more flexible sources of capital through an
enlarged security pool and greater income diversification; and
o larger weightings in key indices;
· providing material cost synergies of approximately £6.2
million on a net pre-tax run-rate recurring annual cost basis, the majority of
which would be expected to be effective shortly following completion of any
Combination; and
· giving Capital & Regional Shareholders the
opportunity to share in the upside from the Combined Group, with Capital &
Regional Shareholders holding, in aggregate, approximately 21 per cent. of the
issued share capital of NewRiver immediately following completion of the
Combination. Capital & Regional Shareholders would also benefit from
partial liquidity from the cash component of any firm offer, if made. On the
basis of the Closing Price per NewRiver Share of 74.5 pence on the Offer
Period Last Practicable Date, the implied value of 62.5 pence per Capital
& Regional Share under the Possible Offer Terms represents an attractive
premium of approximately:
o 21 per cent. to the undisturbed Closing Price of a Capital &
Regional Share of 51.5 pence on the Offer Period Last Practicable Date;
o 21 per cent. to the three-month VWAP of 51.7 pence per Capital
& Regional Share on the Offer Period Last Practicable Date; and
o 18 per cent. to the six-month VWAP of 53.0 pence per Capital &
Regional Share on the Offer Period Last Practicable Date.
In addition, under the Possible Offer Terms, Capital & Regional
Shareholders would also be entitled to receive and retain (i) the Capital
& Regional Interim Dividend of 2.85 pence per Capital & Regional Share
for the six months ended 30 June 2024 which is expected to be paid on 27
September 2024 as well as (ii) the NewRiver Interim Dividend (in the event
that the record date for the NewRiver Interim Dividend is a date falling after
the expected Scheme Record Time). If the record date for the NewRiver Interim
Dividend is a date prior to the Scheme Record Time, Capital & Regional
would declare and pay, prior to the Scheme Record Time, the Capital &
Regional Additional Dividend which is economically equivalent to the NewRiver
Interim Dividend, and Capital & Regional Shareholders would be entitled to
receive and retain such Capital & Regional Additional Dividend. The
NewRiver Interim Dividend or the Capital & Regional Additional Dividend
(as the case may be) would therefore represent an additional 1.3 pence per
Capital & Regional Share of value uplift for Capital & Regional
Shareholders as a result of any Combination.
The Independent Capital & Regional Directors believe that Capital &
Regional has a proven strategy, high quality assets, a highly regarded
internalised management team and strong prospects. While the Independent
Capital & Regional Directors consider that Capital & Regional can
execute its strategy on a standalone basis, the Independent Capital &
Regional Directors accept that the business continues to be impacted by scale
and liquidity challenges and that developments in the UK REIT sector are
typically favouring larger REITs with greater liquidity, lower costs and
better availability of capital.
Growthpoint has recently indicated to the Independent Capital & Regional
Directors that it has undertaken a detailed, group-wide strategic and capital
allocation review with the aim of simplifying its business, identifying assets
that are deemed to be non-core and directing its focus to its core assets.
Whilst Growthpoint maintains its belief that Capital & Regional is an
attractive platform with a high quality portfolio of assets and strong
prospects, Capital & Regional has been identified by Growthpoint as a
non-core asset. The Independent Capital & Regional Directors note that
this change in Growthpoint's position has an impact on Capital &
Regional's prospects. Further to this change in Growthpoint's position,
Growthpoint and Capital & Regional received certain unsolicited
expressions of interest in exploring a possible offer for Capital &
Regional. As at the date of this announcement, NewRiver is the only interested
party to have presented a comprehensive proposal to the Independent Capital
& Regional Directors and completed due diligence. Growthpoint has advised
the Independent Capital & Regional Directors that it believes a
Combination would represent an attractive opportunity to realise value for its
investment in Capital & Regional. Given that Growthpoint has agreed to
support a firm offer made by NewRiver in line with the Possible Offer Terms,
if made, by way of an irrevocable undertaking over its c. 69 per cent.
shareholding, the Independent Capital & Regional Directors believe that a
firm offer, if made by NewRiver, would be highly likely to succeed.
As there would be a share consideration component to any Combination under the
Possible Offer Terms, which would result in Capital & Regional
Shareholders holding NewRiver Shares representing 21 per cent. of the enlarged
issued share capital of NewRiver following completion of any firm offer, if
made, the Independent Capital & Regional Directors and their advisers have
conducted due diligence on NewRiver. This diligence included a review of
corporate and legal matters and the use of external independent real estate
valuers and advisers to review NewRiver's portfolio of assets. This analysis
was not, however, conducted in accordance with the latest version of the Red
Book. The Independent Capital & Regional Directors carefully considered
the output from the reverse due diligence in coming to their conclusions on
the Possible Offer Terms.
The Independent Capital & Regional Directors have taken all of the above
factors into consideration when assessing the value and deliverability of any
firm offer, if made by NewRiver, and have concluded that the significant
strategic, operational and financial benefits of a potential Combination would
be superior to the medium-term standalone prospects of the Capital &
Regional business.
In addition to their consideration of the Possible Offer Terms, in their
evaluation of NewRiver as a suitable owner of Capital & Regional from the
perspective of all stakeholders, the Capital & Regional Directors have
taken into account NewRiver's intentions for the business in the event that it
were to make a firm offer for Capital & Regional. The Capital &
Regional Directors note that NewRiver has confirmed that the existing
contractual and statutory employment rights, including in relation to
pensions, of all Capital & Regional's management and employees would be
fully safeguarded in accordance with applicable law in the event that NewRiver
was to make a firm offer for Capital & Regional.
Accordingly, following careful consideration of the above factors, including
the intentions of Growthpoint, the Independent Capital & Regional
Directors would be prepared to recommend unanimously to Capital & Regional
Shareholders a firm offer to be made by NewRiver to acquire the entire issued,
and to be issued, share capital of Capital & Regional in the event that
NewRiver was to make such a firm offer on the Possible Offer Terms and
otherwise on the terms and subject to the conditions set out in this
announcement and in the Rule 2.7 Announcement (as defined below).
Capital & Regional Board's views on valuation of Capital & Regional
portfolio
The Board of Capital & Regional notes the difference between the valuation
carried out by CBRE as at 30 June 2024 of £375 million and that commissioned
by NewRiver's Board by Knight Frank of £350 million.
The Board of Capital & Regional supports the CBRE valuation of the Capital
& Regional portfolio but acknowledges that real estate valuation by its
nature is subjective and it is not unusual for independent and highly regarded
valuation firms to use differing sets of assumptions and opinions to arrive at
estimated market value.
6. SHAREHOLDER SUPPORT FOR THE POSSIBLE OFFER
Capital & Regional's largest shareholder, Growthpoint Properties Limited
("Growthpoint"), would be fully supportive of a firm offer made in line with
the Possible Offer Terms, if made, and, accordingly, has irrevocably
undertaken to vote, or procure the vote, in favour of the Scheme at the Court
Meeting and of the Capital & Regional Resolution(s) to be proposed at the
Capital & Regional General Meeting (or, in the event that any Combination
would be implemented by way of a Takeover Offer, to accept, or procure the
acceptance of, such Takeover Offer), in respect of 160,648,081 Capital &
Regional Shares, in aggregate, representing approximately 69 per cent. of the
issued ordinary share capital of Capital & Regional on the Last
Practicable Date. Following completion of any Combination, Growthpoint would
be expected to hold NewRiver Shares equivalent to approximately 14 per cent.
of the enlarged issued ordinary share capital of NewRiver (based on the
existing issued ordinary share capital of NewRiver and the issued and to be
issued ordinary share capital of Capital & Regional as at the Last
Practicable Date).
The obligations of Growthpoint under its irrevocable undertaking shall lapse
and cease to have effect on and from the following occurrences:
· a firm intention to make an offer announcement under
Rule 2.7 of the Code is not released by 5.00 p.m. (UK time) on 2 October 2024
(or such later time or date as Capital & Regional and NewRiver may agree);
· NewRiver announces, with the consent of the Panel, that it
does not intend to proceed with the Combination and no new, revised or
replacement Scheme or Takeover Offer (as applicable) is announced by NewRiver
in accordance with Rule 2.7 of the Code at the same time;
· the Combination does not become effective, is withdrawn
or lapses in accordance with its terms, unless:
o the Combination is withdrawn or lapses solely as a result of NewRiver
exercising its right to implement the Combination by way of a Takeover Offer
rather than a Scheme or vice versa; or
o if the lapse or withdrawal either is not confirmed by NewRiver or
is followed within 10 Business Days by an announcement under Rule 2.7 of the
Code by NewRiver (or a person acting in concert with it) to implement the
Combination either by a new, revised or replacement Scheme or Takeover Offer;
o any competing offer for Capital & Regional is made which becomes,
or is declared, unconditional or otherwise becomes effective; or
o an announcement is made in accordance with Rule 2.7 of the Code of a
competing offer (whether by means of a takeover offer within the meaning of
section 974 of the Companies Act 2006 or by way of a scheme of arrangement
under section 895 of the Companies Act 2006) for the ordinary shares in
Capital & Regional, the value of the consideration per Capital &
Regional Share available under which at the time it is made exceeds 68.75
pence per Capital & Regional Share and NewRiver does not match that
competing offer with a revised offer that is at least equivalent to the value
of such competing offer (in the reasonable opinion of the Capital &
Regional Board, having taken advice from its financial adviser(s)) within 10
days of such competing offer being made.
Growthpoint has also undertaken not to sell any New NewRiver Shares which may
be issued to it under the Possible Offer Terms (i) for a period of five months
following any Combination becoming effective without the prior written consent
of NewRiver and other than through NewRiver's financial adviser; and (ii) for
a further period of four months thereafter, without first giving NewRiver
reasonable written notice of any such sale, in both cases subject to certain
customary exceptions.
7. INFORMATION ON NEWRIVER
NewRiver is an established UK real estate investor, asset manager and
developer which is listed on the Equity Shares (Commercial Companies) category
of the Official List of the FCA, has its ordinary shares admitted to trading
on the Main Market of the London Stock Exchange (ticker: NRR) and is a
constituent member of the FTSE All-Share and the FTSE EPRA Indices.
NewRiver's community shopping centres and conveniently located retail parks
are occupied by tenants predominantly focused on providing essential goods and
services. Alongside its balance sheet assets, and in order to leverage its
high-quality retail asset management platform, NewRiver also has a Capital
Partnership business, which generates recurring fee income by providing asset
management services to a high quality roster of institutional, private equity
and public sector partners. NewRiver's objective is to own and manage the most
resilient retail portfolio in the UK, focused on core shopping centres, retail
parks, and regeneration opportunities in order to deliver long term attractive
recurring income returns and capital growth for its shareholders. NewRiver is
one of the largest owners and managers of retail real estate assets in the UK
with gross assets of approximately £539 million as at 30 June 2024 and a
market capitalisation of approximately £252 million as at the Last
Practicable Date.
The NewRiver Group's purpose and strategy is to deliver a reliable and
recurring income led 10 per cent. total accounting return by leveraging its
significant knowledge and experience of the consumer, retail and capital
markets and is underpinned by its business model:
• Disciplined capital allocation - NewRiver assesses the
long-term resilience of its assets, with capital allocation decisions made by
comparing risk-adjusted returns on its assets to those available from other
uses of capital. Capital allocation options include investing into its
existing portfolio, acquiring assets in the direct real estate market and
share buybacks. Assets can be acquired either on its balance sheet or in
capital partnerships.
• Leveraging its platform - NewRiver leverages its market leading
platform to enhance and protect income returns through active asset management
across its assets and on behalf of its capital partnerships. The latter also
provide enhanced returns through asset management fee income and the
opportunity to receive promote fees.
• Flexible balance sheet - NewRiver's operating platform is
underpinned by a conservative, unsecured balance sheet. NewRiver is focused on
maintaining its prudent covenant headroom position and has access to
significant cash reserves which provide it with the flexibility to pursue
opportunities which support its strategy for growth.
The NewRiver Group owns and/or manages a portfolio of approximately £2.0
billion, of which approximately 74 per cent. is owned by its capital partners,
and collects almost £190 million per annum of rent from over 3,000 tenants
across 43 shopping centres and 30 retail parks (including Ellandi) (as at 30
June 2024).
The NewRiver Group's portfolio totals approximately 5.9 million sq. ft. and an
occupancy rate of approximately 97 per cent. (as at 30 June 2024).
8. INFORMATION ON CAPITAL & REGIONAL
Capital & Regional is a UK-focused retail property REIT specialising in
community shopping centres listed on the Equity Shares (Commercial Companies)
category of the Official List of the FCA. Its ordinary shares are admitted to
trading on the Main Market of the London Stock Exchange (ticker: CAL) and it
is a constituent member of the FTSE All-Share and the FTSE EPRA Indices.
Capital & Regional also has a secondary listing on the Main Board of the
Johannesburg Stock Exchange (ticker: CRP).
Capital & Regional has demonstrated a track record of delivering
value-enhancing retail and leisure asset management opportunities across its
portfolio of tailored and centrally located community shopping centres in
Edinburgh, Hemel Hempstead, Ilford, Maidstone, Walthamstow and Wood Green.
Capital & Regional also owns and manages the UK's largest indoor ski slope
operator, Snozone, which has centres in Milton Keynes, Yorkshire and Madrid
(Spain), delivering £8.3 million of revenue for the six months ended 30 June
2024. Capital & Regional focuses on shopping centres providing a strong
retail offering consisting of services and non-discretionary retail in
locations with strong transport links. Since the launch of Capital &
Regional's community shopping centre strategy in 2017, Capital & Regional
has seen a change in merchandising mix with 'Value Fashion' (24.0 per cent.),
Health and Beauty (18.9 per cent.) and 'Food & Grocery' (18.2 per cent.)
presently representing the largest segments across its portfolio. Capital
& Regional had gross assets of £350 million as at 30 June 2024 (based on
the property valuation report on Capital & Regional's portfolio prepared
by Knight Frank, as set out in Part C of Appendix 2 to this announcement) and
a market capitalisation of approximately £144 million as at the Last
Practicable Date.
Capital & Regional's aim of driving sustainable growth, ultimately leading
to sustained shareholder returns through dividend payments, is the product of
its long-term strategy to:
• define and own the community shopping centre category in the UK,
guided by consumer insight and consistent with global best practice;
• hold assets that sit at the heart of local communities,
typically located adjacent to local transport hubs enabling easy access via
public transport as well as available car parking;
• focus around repositioning and re-purposing spaces to
incorporate new stores and uses that reflect the demands of the communities
they serve; and
• ensure that Capital & Regional shopping centres provide
the right offering to drive footfall and dwell time, boosting retailer sales
and thus increasing demand, improving rental income, property values and
consequently revenue and shareholder returns.
The Capital & Regional Group owns a portfolio of approximately £350
million (based on the property valuation report on Capital & Regional's
portfolio prepared by Knight Frank, as set out in Part C of Appendix 3 to this
announcement) and collected £38.2 million of rent from over 399 occupiers
across six shopping centres for the six months ended 30 June 2024.
The Capital & Regional portfolio totals over 2.5 million sq. ft. of
lettable space with 632 lettable units and an occupancy rate of 94 per cent.
(as at 30 June 2024).
9. CERTAIN RISKS ASSOCIATED WITH A FIRM OFFER
There would be certain risks associated with any firm offer, if made. These
are summarised below:
Any firm offer, if made, would be subject to certain conditions which may not
be satisfied or waived
Completion of any firm offer, if made, would be subject to certain conditions
(including, but not limited to, those referred to at paragraph 13 below) (the
"Conditions") being satisfied (or, if permitted, waived).
There is no guarantee that the Conditions would be satisfied in the necessary
time frame (or waived, if applicable) and any firm offer, if made, could,
therefore, be delayed or not complete. Delay in completing any firm offer
would prolong the period of uncertainty for the NewRiver Group and the Capital
& Regional Group and both delay and failure to complete could result in
the accrual of additional costs to their businesses without any of the
potential benefits of any Combination having been achieved.
Therefore, the aggregate consequences of a material delay in completing, or
failure to complete, any firm offer, if made, could have a material adverse
effect on the business, results of operations and financial condition of the
NewRiver Group and the Capital & Regional Group.
NewRiver's ability to invoke certain conditions to any firm offer, if made, to
either lapse such firm offer or to delay completion of such firm offer would
be subject to the Panel's consent. The Panel would need to be satisfied that
the underlying circumstances were of "material significance" to NewRiver in
the context of any Combination and this is a high threshold to fulfil.
Consequently, there is a significant risk that NewRiver could be required to
complete any firm offer, if made, even where certain conditions have not been
satisfied or where a material adverse change has occurred to the Capital &
Regional Group. If any of the events described above were to occur, they could
result in additional costs and/or the delay or the failure (partial or
otherwise) to realise the financial benefits and synergies relating to any
Combination identified by the parties or could otherwise impact NewRiver's
strategy and operations.
If any firm offer, if made, completes, the integration of the Capital &
Regional Group with the NewRiver Group could result in operating difficulties
and other adverse consequences
If any firm offer, if made, were to complete, the process of integrating
Capital & Regional and its subsidiaries into the NewRiver Group could
create unforeseen operating difficulties and expenditures and pose management,
administrative and financial challenges. Specifically, integrating operations
and personnel and pre-completion or post-completion costs could prove more
difficult and/or more expensive than anticipated, thereby rendering the value
of the Capital & Regional Group less than the value paid. The integration
of the Capital & Regional Group could require significant time and effort
on the part of NewRiver's management. The challenges of integrating the
Capital & Regional Group could also be exacerbated by differences between
the NewRiver Group's and the Capital & Regional Group's operational and
business culture, the need to implement cost-cutting measures, difficulties in
maintaining internal controls and difficulties in establishing control over
cash flows and expenditures. Such difficulties in successfully integrating
Capital & Regional could have an adverse effect on the Company's financial
condition and results of operations.
The NewRiver Group could fail to realise the business growth opportunities,
revenue benefits, cost savings, operational efficiencies and other benefits
anticipated from any firm offer, if made
As stated at paragraph 3 above, the NewRiver Board believes that there is a
strong strategic, operational and financial rationale for a Combination and
that the Combined Group would benefit from enhanced scale, material cost
savings, mid- to high-teens accretion to earnings per share, better access to
acquisition and asset management opportunities, improved debt optionality,
expected cost of capital benefits and the potential for increased share
liquidity. However, these benefits may not be realised, for various reasons,
including because the assumptions upon which the NewRiver Board determined the
process of integration and the proposed cost savings could prove to be
incorrect.
Under any of these circumstances, the cost savings, accretion to earnings per
share, better access to acquisition and asset management opportunities,
improved debt optionality, expected cost of capital benefits and the potential
for increased share liquidity anticipated by the NewRiver Board to result from
any firm offer, if made, may not be achieved as expected, or at all, or may be
delayed, or may involve additional costs. To the extent that the NewRiver
Group incurs higher integration costs or achieves lower revenue benefits or
fewer cost savings than expected, the NewRiver Group's operating results, and
prospects and the price of NewRiver Shares could suffer.
10. CURRENT TRADING AND OUTLOOK
NewRiver
For details of NewRiver's current trading and prospects, please refer to
NewRiver's First Quarter Company Update for the period from 1 April 2024 to 30
June 2024, released on 5 August 2024. A copy of the update is available on
NewRiver's website at https://www.nrr.co.uk/investors/regulatory-news
(https://www.nrr.co.uk/investors/regulatory-news) .
Capital & Regional
For details of Capital & Regional's current trading and prospects, please
refer to Capital & Regional's Half Year Results to 30 June 2024, released
on 1 August 2024. A copy of the announcement is available on Capital &
Regional's website at
https://capreg.com/wp-content/uploads/2024/09/cr-interim-press-release-hy24-final-aug-24.pdf
(https://url.uk.m.mimecastprotect.com/s/Mf53CkZRDc03YPrF2fOCGfa5o?domain=capreg.com)
.
11. INTENTIONS FOR THE COMBINED GROUP
Listing and registered office
Following any Combination becoming effective, NewRiver would remain listed on
the Equity Shares (Commercial Companies) category of the Official List and
admitted to trading on the Main Market of the London Stock Exchange. The
registered office of NewRiver would remain in London.
REIT status
Both the NewRiver Group and the Capital & Regional Group fall within the
UK REIT regime and benefit from the tax efficiencies provided by that regime.
The Combined Group would be expected to fall within the UK REIT regime and the
relevant tax measures would continue to apply to the Combined Group.
Board and governance arrangements
Applications would be made to: (i) the FCA to cancel the listing and trading
of the Capital & Regional Shares on the Equity Shares (Commercial
Companies) category of the Official List and Main Market of the London Stock
Exchange; and (ii) the JSE for the cancellation of the listing and trading of
the Capital & Regional Shares on the Main Board of the JSE. Consequently,
while NewRiver recognises the skills and experience of the Capital &
Regional Board, Capital & Regional would no longer require listed company
governance structures following any Combination and, accordingly, it is
intended that the chair and other non-executive Capital & Regional
Directors would step down from the Capital & Regional Board and the boards
of Capital & Regional's subsidiaries (as applicable) with effect from any
Combination becoming effective.
In addition, as announced by Capital & Regional on 8 May 2024, Lawrence
Hutchings has resigned from his role as Chief Executive of Capital &
Regional to take up a new role at Workspace Group PLC and it is intended that
he would also step down from the Capital & Regional Board and the boards
of Capital & Regional's subsidiaries (as applicable). It is also intended
that Stuart Wetherly (Capital & Regional Group Finance Director) would
step down from the Capital & Regional Board and the boards of Capital
& Regional's subsidiaries (as applicable) on completion of a period of
handover. It is anticipated that the current board and management structure of
NewRiver would become the board and management structure of the Combined Group
on completion of any Combination.
Portfolio
The NewRiver Directors believe that Capital & Regional's portfolio of
community shopping centres would be complementary to NewRiver's existing
portfolio and therefore would intend to implement individual business plans in
respect of each asset and hold them within NewRiver's Core Shopping Centre
portfolio. NewRiver has a track record of disciplined capital recycling based
on risk-adjusted forward-looking returns and would intend to monitor the
performance of Capital & Regional's assets in the 12 months
post-completion of any Combination and, subject to market conditions, may
consider the disposal of Capital & Regional's smaller shopping centres on
a selective basis which would reduce the Combined Group's leverage.
Snozone operates three indoor snow sports centres in the UK and Spain and is a
separate operating segment of Capital & Regional with its own management
team. While Snozone would be expected to continue operating immediately
post-completion of any Combination broadly as it does as at the date of this
announcement, NewRiver is a specialist owner and manager of retail real estate
and therefore it would be NewRiver's intention to undertake a strategic review
of the Snozone business within the first 12 months post-completion of any
Combination to establish whether it is a core hold for NewRiver or whether it
would be more appropriate to recycle capital through its disposal. As at the
date of this announcement, no decisions have been taken in relation to the
Snozone business.
Management, employees, pensions, locations of business and research and
development
Across the Combined Group, there would be duplicated costs and functions
following completion of any Combination. NewRiver would therefore intend to
seek operating cost and synergy benefits from the rationalisation of the board
(as outlined above), and overlapping group functions including certain senior
management.
In order to achieve the full potential benefits of any Combination, including
the expected cost synergies, the NewRiver Directors would continue to
undertake a detailed business, operational and administrative review of the
Combined Group to assess how it can work most effectively and efficiently
following completion of any Combination. This evaluation would include an
assessment of the overlapping group functions of Capital & Regional and
NewRiver, together with consolidating support and asset and property
management functions (including the employment of certain Capital &
Regional employees currently in asset and property management roles
potentially being transferred by operation of law to one of NewRiver's current
outsourced service providers), as well as removing duplicated costs in respect
of certain corporate functions related to Capital & Regional's status as a
listed and publicly traded company, which would no longer be required by the
Combined Group. Any Combination would be likely to lead to a significant
reduction in duplicative senior, corporate and operational Capital &
Regional Group headcount, impacting a minority of total Capital & Regional
Group employee headcount. Capital & Regional Group headcount would be
further reduced by the proposed transfer of asset and property management
staff by operation of law to one of NewRiver's current outsourced service
providers (as referred to above).
NewRiver would intend to consolidate the head office functions of NewRiver and
Capital & Regional so that the Combined Group could operate from a single
location. It is anticipated that the Combined Group would operate from
NewRiver's existing head office at 89 Whitfield Street, London, and that
Capital & Regional's head office at Strand Bridge House, Strand, London,
would, in due course, be sub-let. It is not envisaged that material changes
would arise in relation to NewRiver's existing employees and headcount as a
result of any Combination.
The proposals referred to above would remain subject to a fair and transparent
process in accordance with applicable legal requirements (including, but not
limited to, where required, any applicable prior information and consultation
obligations).
The Combined Group would intend to safeguard existing statutory and
contractual employment rights following completion of any Combination and
NewRiver would not intend to make any material changes in the conditions of
employment of existing Capital & Regional employees, including with
respect to pension contributions.
Save as set out above, NewRiver would not otherwise intend any redeployment of
Capital & Regional's fixed asset base. Owing to the nature of its
business, Capital & Regional has no research and development function.
Neither Capital & Regional nor NewRiver have an existing defined benefit
pension scheme.
Dividends
Following the completion of any Combination, the Combined Group would continue
to pursue NewRiver's dividend policy of paying dividends equivalent to 80 per
cent. of UFFO, with any top-up, including where required to ensure compliance
with the REIT regime, to be confirmed at the Combined Group's full year
results.
12. PRE-CONDITIONS TO THE MAKING OF ANY FIRM OFFER
The making of any firm offer for the entire issued, and to be issued, ordinary
share capital of Capital & Regional by NewRiver is subject to and
conditional upon the following:
· the satisfactory completion of the Placing (in accordance
with the terms, and subject to the conditions, set out in the Placing Launch
Announcement) (the "Placing Condition"); and
· the receipt by NewRiver of confirmation from
the Independent Capital & Regional Directors of their:
o intention, in the event that a firm offer is made by NewRiver on the
Possible Offer Terms and otherwise on the terms and subject to the conditions
set out this announcement and in the Rule 2.7 Announcement (as defined below),
to provide their unanimous, unqualified and unconditional recommendation to
Capital & Regional Shareholders to vote, or procure the vote, in favour of
the Scheme at the Court Meeting and of the Capital & Regional
Resolution(s) to be proposed at the Capital & Regional General Meeting
(or, in the event that any Combination would be implemented by way of a
Takeover Offer, to accept, or procure the acceptance of, such Takeover Offer)
(having been advised by Capital & Regional's financial advisers that the
financial terms of such firm offer are fair and reasonable); and
o agreement that an announcement of a firm offer by NewRiver under Rule
2.7 of the Code in substantially agreed form as at the date of this
announcement (a "Rule 2.7 Announcement") on the Possible Offer Terms and
otherwise on the terms and subject to the conditions set out in this
announcement containing such recommendation may be released.
If either of the above pre-conditions is not satisfied or, if applicable,
waived, NewRiver will be under no obligation to make a firm offer for Capital
& Regional and to release a Rule 2.7 Announcement. However, there can be
no certainty that a firm offer will ultimately be made, even if the above
pre-conditions are satisfied or, if applicable, waived.
The Independent Capital & Regional Directors are not obliged to recommend
any firm offer by NewRiver on the Possible Offer Terms. It is therefore
possible that the Independent Capital & Regional Directors could decide
against making such a recommendation, notwithstanding that the Placing
Condition is satisfied or, if applicable, waived, in which case NewRiver would
not be required to make a firm offer for Capital & Regional and release a
Rule 2.7 Announcement.
13. CONDITIONS
It is intended that any firm offer, if made, would be implemented by means of
a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
NewRiver would reserve the right to effect any firm offer, if made, by way of
a Takeover Offer, subject to the consent of the Panel.
Any firm offer, if made, would be subject to the following conditions:
· the receipt of approval from the FCA to the proposed change of
control of a regulated entity within the Capital & Regional Group;
· a resolution to approve the Scheme being passed by the
requisite majority of Capital & Regional Shareholders;
· the Capital & Regional Resolution(s) being passed at
the Capital & Regional General Meeting by the requisite majority or
majorities of Capital & Regional Shareholders;
· the NewRiver Combination Resolution(s) being
passed at the NewRiver General Meeting by the requisite majority or majorities
of NewRiver Shareholders;
· the FCA having acknowledged to NewRiver or its agent (and
such acknowledgement not having been withdrawn) that the application for the
admission of the New NewRiver Shares to the Equity Shares (Commercial
Companies) category of the Official List has been approved and (after
satisfaction of any conditions to which such approval is expressed to be
subject) will become effective as soon as a dealing notice has been issued by
the FCA and any listing conditions having been satisfied;
· the London Stock Exchange having acknowledged to
NewRiver or its agent (and such acknowledgement not having been withdrawn)
that the New NewRiver Shares will be admitted to trading on the Main Market;
· following the Capital & Regional Meetings, the
Scheme being sanctioned by the Court (without modification, or with
modification on terms agreed by NewRiver and Capital & Regional); and
· following such sanction, a copy of the
Scheme Court Order being delivered to the Registrar of Companies.
14. CONSENTS
Jefferies, Kinmont, Panmure Liberum, Shore Capital, Deutsche Numis, Stifel and
Java Capital have each given and not withdrawn their consent to the
publication of this announcement with the inclusion herein of the references
to their names in the form and context in which they appear.
Knight Frank, Colliers and CBRE have each given and not withdrawn their
consent to the publication of their valuation reports in this announcement and
the inclusion herein to the references to their names in the form and context
in which they appear.
BDO has given and not withdrawn its consent to the inclusion of its report on
the Quantified Financial Benefits Statement in Part B of Appendix 3 of this
announcement.
15. DOCUMENTS PUBLISHED ON A WEBSITE
In accordance with Rule 26.1 of the Code, copies of the following documents
will, to the extent not already published there, by no later than 12.00 noon
on the Business Day following the date of this announcement, be published on
Capital & Regional's website at
https://capreg.com/investor-info/possible-offer/
(https://capreg.com/investor-info/possible-offer/) and NewRiver's website at
https://www.nrr.co.uk/investors/possible-offer-for-capital-and-regional-plc/disclaimer
(https://www.nrr.co.uk/investors/possible-offer-for-capital-and-regional-plc/disclaimer)
during the Offer Period:
· this announcement;
· the irrevocable undertaking referred to in
paragraph 6 above;
· the consent letters from each of Jefferies, Kinmont, Panmure
Liberum, Shore Capital, Deutsche Numis, Stifel, Java Capital, BDO, Knight
Frank, Colliers and CBRE referred to in paragraph 14 above;
· the no material change letters from each of Knight
Frank, Colliers and CBRE;
· the reports from each of BDO and Jefferies in relation
to the Quantified Financial Benefits Statement contained in Parts B and C,
respectively, of Appendix 3 to this announcement;
· the Knight Frank valuation reports;
· the Colliers valuation report; and
· the CBRE valuation report.
The contents of Capital & Regional's website and NewRiver's website, and
any website accessible from hyperlinks, are not incorporated into and do not
form part of this announcement.
Appendix 1 to this announcement contains bases and sources of certain
information contained in this announcement. Property valuation reports for
Capital & Regional and NewRiver (as at 30 June 2024) pursuant to Rule 29
of the Code are set out in Appendix 2.
In the event that the assets within either Capital & Regional's or
NewRiver's property portfolios were to be sold at the valuations contained in
the valuation reports set out in Appendix 2 to this announcement, any gains
realised on such disposals may be subject to taxation in the UK.
For the purposes of Rule 29.5 of the Code, the NewRiver Board confirms that
each of Knight Frank and Colliers has confirmed to it that an updated
valuation of the relevant properties within NewRiver's property portfolio
(and, in the case of Knight Frank, Capital & Regional's property
portfolio) as at the date of this announcement which it has valued would not
be materially different from the valuations given by each of Knight Frank and
Colliers as at 30 June 2024 and contained in their respective valuation
reports set out in Appendix 2 to this announcement.
For the purposes of Rule 29.5 of the Code, the Capital & Regional Board
confirms that CBRE has confirmed to it that an updated valuation of Capital
& Regional's property portfolio as at the date of this announcement would
not be materially different from the valuation given by CBRE as at 30 June
2024 and contained in CBRE's valuation report set out in Appendix 2 to this
announcement.
For the purposes of Rule 28 of the Code, the Quantified Financial Benefits
Statement is the responsibility of NewRiver and the NewRiver Directors.
Appendix 3 to this announcement sets out the Quantified Financial Benefits
Statement relating to cost savings and synergies arising out of any
Combination and provides underlying information and bases of belief. Appendix
3 also includes reports from NewRiver's reporting accountant, BDO, and its
lead financial adviser, Jefferies, in connection with the Quantified Financial
Benefits Statement, as required pursuant to Rule 28.1(a) of the Code.
Appendix 4 to this announcement sets out certain information in relation to
the Combined Group's debt position. Appendix 5 to this announcement sets out
certain additional information in relation to the Combined Group's portfolio.
Appendix 6 contains certain information in relation to the top five tenants of
each of NewRiver, Capital & Regional and the Combined Group. Certain terms
used in this announcement are defined in Appendix 7.
This is an announcement falling under Rule 2.4 of the Code and does not
constitute an announcement of a firm intention to make an offer under Rule 2.7
of the code and there can be no certainty that any firm offer will be made nor
as to the terms on which any firm offer might be made. This announcement does
not constitute an offer for sale of any securities or an invitation to
purchase or subscribe for any securities.
Enquiries
NewRiver REIT plc
Allan Lockhart (Chief Executive) +44 20 3328 5800
Will Hobman (Chief Financial Officer)
Jefferies International Limited (Lead Financial Adviser and Joint Corporate
Broker to NewRiver)
Philip Noblet +44 20 7029 8600
Rishi Bhuchar
Ed Matthews
Andrew Morris
William Brown
Kinmont Limited (Joint Financial Adviser to NewRiver)
Gavin Kelly +44 20 7087 9100
Mat Thackery
Panmure Liberum Limited (Sole Sponsor and Joint Corporate Broker to NewRiver)
Jamie Richards +44 20 3100 2000
David Watkins
Amrit Mahbubani
Nikhil Varghese
Shore Capital Stockbrokers Limited (Joint Corporate Broker to NewRiver)
Mark Percy (Corporate Advisory) +44 20 7408 4090
James Thomas (Corporate Advisory)
Ben Canning (Corporate Broking)
Malachy McEntyre (Corporate Broking)
FTI Consulting (Communications Adviser to NewRiver)
Dido Laurimore +44 20 3727 1000
Giles Barrie
Capital & Regional plc
Lawrence Hutchings Via FTI Consulting
Stuart Wetherly
Deutsche Numis (Joint Financial Adviser, Joint Rule 3 adviser and Joint Broker
to Capital & Regional)
Ben Stoop +44 20 7260 1000
Stuart Ord
Jack McLaren
Stifel (Joint Financial Adviser, Joint Rule 3 adviser and Joint Broker to
Capital & Regional)
Mark Young +44 20 7710 7600
Nick Harland
Jonathan Wilkes-Green
Catriona Neville
Java Capital (JSE Sponsor to Capital & Regional)
Daniel Ross +27 (0)83 716 8665
Shivani Bhikha +27 (0)78 120 6931
FTI Consulting (Communications Adviser to Capital & Regional)
Richard Sunderland +44 20 3727 1000
Bryn Woodward
Oliver Parsons
Eversheds Sutherland (International) LLP is acting as legal adviser to
NewRiver in connection with the Possible Offer.
CMS Cameron McKenna Nabarro Olswang LLP is acting as legal adviser to Capital
& Regional in connection with the Possible Offer.
Further information
This announcement contains inside information in relation to NewRiver and
Capital & Regional for the purposes of Article 7 of the Market Abuse
Regulation. This announcement has been authorised for release on behalf of
NewRiver by the NewRiver Board. The person responsible for arranging the
release of this announcement on behalf of Capital & Regional is Stuart
Wetherly, Company Secretary.
This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise, or the solicitation of any vote in
favour or approval of any offer in any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction and any such offer (or
solicitation) may not be extended in any such jurisdiction.
This announcement has been prepared in accordance with English law and the
Code, and information disclosed may not be the same as that which would have
been prepared in accordance with laws outside of the United Kingdom. The
distribution of this announcement in jurisdictions outside the United Kingdom
may be restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.
Disclaimers
Jefferies International Limited ("Jefferies"), Panmure Liberum Limited
("Panmure Liberum") and Shore Capital Stockbrokers Limited ("Shore Capital",
and together with Jefferies and Panmure Liberum, the "Joint Brokers") are
authorised and regulated by the FCA in the United Kingdom. Jefferies is acting
as lead financial adviser, Panmure Liberum is acting as sole sponsor, and the
Joint Brokers are each acting as joint broker, joint global co-ordinator and
joint bookrunner exclusively for NewRiver and no one else in connection with
the Possible Offer and shall not be responsible to anyone other than NewRiver
for providing the protections afforded to their clients, nor for providing
advice in connection with the Possible Offer or any matter referred to herein.
None of the Joint Brokers nor any of their affiliates (nor any of them or
their respective directors, officers, employees, representatives or agents)
owe or accept any duty, liability or responsibility whatsoever (whether
direct, indirect, consequential, whether in contract, in tort, under statute
or otherwise) to any person who is not a client of such Joint Broker in
connection with the Possible Offer, this announcement, any statement contained
herein or otherwise.
Kinmont Limited ("Kinmont"), which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively for NewRiver and no one else in
connection with the Possible Offer and shall not be responsible to anyone
other than NewRiver for providing the protections afforded to clients of
Kinmont, nor for providing advice in connection with the Possible Offer or any
matter referred to herein. Neither Kinmont nor any of its affiliates (nor any
of its or their respective directors, officers, employees, representatives or
agents) owes or accepts any duty, liability or responsibility whatsoever
(whether direct, indirect, consequential, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Kinmont in
connection with the Possible Offer, this announcement, any statement contained
herein or otherwise.
Numis Securities Limited ("Deutsche Numis"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively for Capital &
Regional and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Capital & Regional for providing the protections afforded to clients
of Deutsche Numis, nor for providing advice in relation to any matter referred
to herein. Neither Deutsche Numis nor any of its affiliates (nor any of their
respective directors, officers, employees or agents), owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this announcement, any
statement contained herein or otherwise.
Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively for Capital &
Regional and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Capital & Regional for providing the protections afforded to clients
of Stifel, nor for providing advice in relation to any matter referred to
herein.
Java Capital Trustees and Sponsors Proprietary Limited ("Java Capital"), which
is authorised and regulated in South Africa by the JSE, which is licensed as a
securities exchange and is regulated by the Financial Sector Conduct Authority
and the Prudential Authority of South Africa, is acting as JSE sponsor
exclusively for Capital & Regional and for no one else in connection with
the matters referred to in this announcement and will not be responsible to
anyone other than Capital & Regional for providing the protections
afforded to clients of Java Capital or for providing advice in relation to the
contents of, or matters referred to in, this announcement or any matter
referred to herein. Neither Java Capital nor any of its subsidiaries,
affiliates or branches owes or accepts any duty, liability or responsibility
whatsoever (whether direct, indirect, consequential, whether in contract, in
tort, under statute or otherwise) to any person who is not a client of Java
Capital in connection with this announcement, any statement or other matter or
arrangement referred to herein or otherwise.
Notice to US investors in Capital & Regional
US holders of Capital & Regional Shares should note that any firm offer,
if made, would relate to the shares of an English company and would be made by
means of a scheme of arrangement provided for under, and governed by, English
company law. A transaction effected by means of a scheme of arrangement is not
subject to the tender offer rules or the proxy solicitation rules under the US
Exchange Act. Accordingly, any firm offer, if made, would be subject to the
disclosure and procedural requirements and practices applicable in the United
Kingdom to schemes of arrangement which differ from the disclosure
requirements of United States tender offer and proxy solicitation rules.
The financial information included in this announcement and to be included in
any Scheme Document if a firm offer is made (or, if any firm offer is
implemented by way of a Takeover Offer, any Offer Document) has been, or will
have been, prepared in accordance with International Financial Reporting
Standards and thus may not be comparable to the financial information of US
companies or companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the United States.
If a firm offer is made, any New NewRiver Shares would be expected to be
issued in reliance upon the exemption from the registration requirements of
the US Securities Act provided by Section 3(a)(10) thereof.
For the purposes of qualifying for the exemption from the registration
requirements of the US Securities Act afforded by Section 3(a)(10) thereunder,
Capital & Regional would advise the Court that its sanctioning of the
Scheme would be relied on by NewRiver as an approval of the Scheme following a
hearing on the fairness of the terms and conditions of the Scheme to Capital
& Regional Shareholders, at which Court hearing all Capital & Regional
Shareholders would be entitled to attend in person or through counsel to
support or oppose the sanctioning of the Scheme and with respect to which
notification has been given to all such holders.
None of the securities referred to in this announcement have been approved or
disapproved by the SEC or any US state securities commission, nor have any
such authorities passed judgment upon the fairness or the merits of any firm
offer, if made, or determined if this announcement is accurate or complete.
Any representation to the contrary is a criminal offence in the United States.
If, in the event a firm offer is made, NewRiver exercises the right to
implement any Combination by way of a Takeover Offer and determines to extend
the offer into the United States, the Takeover Offer would be made in
compliance with applicable United States tender offer and securities laws and
regulations and the requirements of US state securities laws, in each case, to
the extent any exemptions thereunder are not applicable.
A US holder of Capital & Regional Shares should be aware that any
transactions contemplated herein could have tax consequences for US federal
income tax purposes and under applicable US state and local, as well as
foreign and other, tax laws. In the event that a firm offer is made, each
Capital & Regional Shareholder would be urged to consult with legal, tax
and financial advisers in connection with making a decision regarding any
Combination.
It may be difficult for US holders of Capital & Regional Shares to enforce
their rights and any claims arising out of US federal laws, since each of
NewRiver and Capital & Regional are located in a non-US jurisdiction, and
some or all of their officers and directors may be residents of a non-US
jurisdiction. US holders of Capital & Regional Shares may not be able to
sue a non-US company or its officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to compel a
non-US company and its affiliates to subject themselves to a US court's
judgement.
To the extent permitted by applicable law, in accordance with normal UK
practice, NewRiver, certain affiliated companies and their nominees or brokers
(acting as agents), may from time to time make certain purchases of, or
arrangements to purchase, Capital & Regional Shares outside of the US,
other than pursuant to any firm offer, if made, until the date on which any
Combination and/or Scheme becomes Effective, lapses or is otherwise withdrawn.
If such purchases or arrangements to purchase were to be made they would occur
either in the open market at prevailing prices or in private transactions at
negotiated prices and comply with applicable law, including the US Exchange
Act. Any information about such purchases would be disclosed as required in
the UK, would be reported to the Regulatory News Service of the London Stock
Exchange and would be available on the London Stock Exchange website at
www.londonstockexchange.com (http://www.londonstockexchange.com) and via SENS.
Forward-looking statements
This announcement (including information incorporated by reference into this
announcement), oral statements made regarding the Possible Offer, and other
information published by NewRiver and Capital & Regional contain
statements which are, or may be deemed to be, "forward-looking statements".
Forward-looking statements are prospective in nature and are not based on
historical facts, but rather on current expectations and projections of
NewRiver and Capital & Regional about future events, and are therefore
subject to risks and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the forward-looking
statements.
The forward-looking statements contained in this announcement include
statements relating to the expected effects of any firm offer, if made, on
NewRiver and Capital & Regional, the expected timing and scope of any firm
offer, if made, and other statements other than historical facts. Often, but
not always, forward-looking statements can be identified by the use of
forward-looking words such as "plans", "expects" or "does not expect", "is
expected", "is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Forward-looking statements include statements
relating to the following: (i) future capital expenditures, expenses,
revenues, earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; and (ii) business and
management strategies and the expansion and growth of NewRiver's or Capital
& Regional's or the Combined Group's operations and potential synergies
resulting from any firm offer, if made.
Although NewRiver and Capital & Regional believe that the expectations
reflected in such forward-looking statements are reasonable, neither NewRiver
nor Capital & Regional can give assurance that such expectations will
prove to be correct. By their nature, forward-looking statements involve risk
and uncertainty because they relate to events and depend on circumstances that
will occur in the future.
There is a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to: the ability to
complete any firm offer, if made; the ability to obtain requisite regulatory
and shareholder approvals and the satisfaction of other conditions on the
proposed terms; changes in the global political, economic, business and
competitive environments and in market and regulatory forces; changes in
future exchange and interest rates; changes in tax rates; future business
combinations or disposals; changes in general economic and business
conditions; changes in the behaviour of other market participants; the
anticipated benefits from any Combination not being realised as a result of
changes in general economic and market conditions; weak, volatile or illiquid
capital and/or credit markets; changes in the degree of competition in the
geographic and business areas in which NewRiver and Capital & Regional
operate; and changes in laws or in supervisory expectations or requirements.
Other unknown or unpredictable factors could cause actual results to differ
materially from those expected, estimated or projected in the forward-looking
statements. If any one or more of these risks or uncertainties materialises or
if any one or more of the assumptions proves incorrect, actual results may
differ materially from those expected, estimated or projected. Such
forward-looking statements should therefore be construed in the light of such
factors.
Neither NewRiver nor Capital & Regional, nor any of their respective
associates or directors, officers or advisers, provides any representation,
assurance or guarantee that the occurrence of the events expressed or implied
in any forward-looking statements in this announcement will actually occur.
Given the risks and uncertainties, you are cautioned not to place any reliance
on these forward-looking statements. Other than in accordance with their legal
or regulatory obligations, neither NewRiver nor Capital & Regional is
under any obligation, and each of NewRiver and Capital & Regional
expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website
at www.thetakeoverpanel.org.uk, (https://www.thetakeoverpanel.org.uk/)
including details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified. You should
contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are
in any doubt as to whether you are required to make an Opening Position
Disclosure or a Dealing Disclosure.
Quantified Financial Benefits Statement
Statements of estimated cost savings and synergies relate to future actions
and circumstances which, by their nature, involve risks, uncertainties and
contingencies. As a result, the cost savings and synergies referred to in the
event a firm offer is made may not be achieved, may be achieved later or
sooner than estimated, or those achieved could be materially different from
those estimated. Neither the Quantified Financial Benefits Statement nor any
other statement in this announcement should be construed as a profit forecast
or interpreted to mean that the Combined Group's earnings in the first full
year following any Combination becoming effective, or in any subsequent
period, would necessarily match or be greater than or be less than those of
NewRiver or Capital & Regional for the relevant preceding financial period
or any other period. For the purposes of Rule 28 of the Code, the Quantified
Financial Benefits Statement contained in this announcement is the
responsibility of NewRiver and the NewRiver Directors.
No profit forecasts or estimates
No statement in this announcement is intended as a profit forecast or profit
estimate for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share for NewRiver or
Capital & Regional for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for NewRiver or Capital & Regional.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables and paragraphs may vary slightly and figures shown as totals
in certain tables and paragraphs may not be an arithmetic aggregation of the
figures that precede them.
Rule 2.4 information
In accordance with Rule 2.4(c)(iii) of the Code, NewRiver confirms that it is
not aware of any dealings in Capital & Regional Shares that would require
it to offer a minimum level, or a particular form, of consideration under Rule
6 or Rule 11 of the Code. However, it has not been practicable for NewRiver to
make enquiries of all persons acting in concert with it prior to the date of
this announcement in order to confirm whether any details are required to be
disclosed under Rule 2.4(c)(iii) of the Code. To the extent that any such
details are identified following such enquiries, NewRiver will make an
announcement disclosing such details as soon as practicable, and in any event
by no later than the time it is required to make its Opening Position
Disclosure under Rule 8.1 of the Code.
Publication on a website
In accordance with Rule 26.1 of the Code, a copy of this announcement will be
made available, subject to certain restrictions relating to persons resident
in Restricted Jurisdictions, on Capital & Regional's website at
https://capreg.com/investor-info/possible-offer/
(https://capreg.com/investor-info/possible-offer/) and NewRiver's website at
https://www.nrr.co.uk/investors/possible-offer-for-capital-and-regional-plc/disclaimer
(https://www.nrr.co.uk/investors/possible-offer-for-capital-and-regional-plc/disclaimer)
by no later than 12 noon (London time) on the first Business Day following the
date of this announcement.
For the avoidance of doubt, neither the contents of these websites nor the
contents of any websites accessible from any hyperlinks is incorporated into
or forms part of this announcement.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, Capital & Regional Shareholders
may request a hard copy of this announcement (and any information incorporated
by reference in this announcement), free of charge, by contacting Equiniti
during business hours on 0371 384 2438 (from within the United Kingdom) and
+44 (0) 121 415 7047 (from outside the United Kingdom) or by submitting a
request in writing to Equiniti, Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA. Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines will be open between 9.00 a.m. to 5.30
p.m., Monday to Friday excluding public holidays in England and Wales.
Capital & Regional Shareholders recorded on the South African Register may
request hard copies of this announcement by contacting JSE Investor Services
at One Exchange Square, 2 Gwen Lane, Sandown, Sandton 2196, South Africa or on
011 713 0800 (from within South Africa) and +27 11 713 0800 (from outside
South Africa) between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday
(public holidays excepted). Calls to this number from persons who are not
resident in South Africa are charged at the applicable international rate.
Calls from a mobile device may incur network extras.
For persons who receive a copy of this announcement in electronic form or via
a website notification, a hard copy of this announcement will not be sent
unless so requested. Such persons may also request that all future documents,
announcements and information to be sent to them in relation to the
Combination should be in hard copy form.
appendix 1
SOURCES OF INFORMATION AND BASES OF CALCULATIONS
Unless otherwise stated, the following constitute the sources of information
and bases of calculations in this announcement:
1. All prices quoted for NewRiver Shares and Capital & Regional
Shares are closing middle market quotations of a NewRiver Share or Capital
& Regional Share (as applicable) derived from the Daily Official List of
the London Stock Exchange on the relevant date(s).
2. As at the close of business on the Last Practicable Date,
315,439,468 NewRiver Shares and 232,996,247 Capital & Regional Shares
(including 399,297 Capital & Regional Shares held by the trustee of the
Capital & Regional plc Employee Share Ownership Trust 2002 and available
to be used to satisfy Capital & Regional Share Awards) were in issue and
admitted to trading on the Main Market of the London Stock Exchange. The legal
entity identifier for NewRiver is 2138004GX1VAUMH66L31. The ISIN for the
NewRiver Shares is GB00BD7XPJ64. The legal entity identifier for Capital &
Regional is 21380097W74N9OYF5Z25. The ISIN for the Capital & Regional
Shares is GB00BL6XZ716.
3. As at the close of business on the Last Practicable Date, there
was an aggregate maximum of 4,627,179 Capital & Regional Shares subject to
subsisting Capital & Regional Share Awards. This number does not include
any additional Capital & Regional Shares which will be added to such
subsisting Capital & Regional Share Awards in respect of any dividends
which have not yet been paid, including the Capital & Regional Interim
Dividend. The remuneration committee of the Capital & Regional Board has
resolved that, in the context of the Combination, Capital & Regional Share
Awards will vest (if not already vested) and be exercisable on the Scheme
being sanctioned by the Court in respect of a maximum of (i) 1,631,777 Capital
& Regional Shares plus (ii) 120,800 Capital & Regional Shares pursuant
to a Capital & Regional Share Award expected to be granted immediately
prior to the Scheme being sanctioned by the Court, and to vest and be
exercisable on the Scheme being sanctioned by the Court plus (iii) any
additional Capital & Regional Shares which will be added to such
subsisting Capital & Regional Share Awards in respect of any dividends
which have not been paid as at the Last Practicable Date. In the event that
the Scheme is sanctioned by the Court on or after 1 January 2025, Capital
& Regional Share Awards will vest and be exercisable on the Scheme being
sanctioned by the Court in respect of an additional maximum of 454,692 Capital
& Regional Shares (excluding any additional Capital & Regional Shares
which will be added to such subsisting Capital & Regional Share Awards in
respect of any dividends which have not yet been paid, including the Capital
& Regional Interim Dividend).
4. Any references to the issued, and to be issued, ordinary share
capital of Capital & Regional are based on:
4.1 the 232,996,247 Capital & Regional Shares referred to in
paragraph 2 above; plus
4.2 the 1,752,577 Capital & Regional Shares expected to be
subject to Capital & Regional Share Awards when the Scheme is sanctioned
by the Court; less
4.3 the 399,297 Capital & Regional Shares held by the
trustee of the Capital & Regional plc Employee Share Ownership Trust 2002
and available to be used to satisfy Capital & Regional Share Awards; plus
4.4 the 454,692 additional Capital & Regional Shares in
respect of which Capital & Regional Share Awards will vest and be
exercisable if the Scheme is sanctioned by the Court after 1 January 2025;
plus
4.5 up to 87,009 additional Capital & Regional Shares
which may be added to subsisting Capital & Regional Share Awards in
respect of the Capital & Regional Interim Dividend.
5. All volume-weighted average NewRiver and Capital &
Regional share prices are derived from data provided by Bloomberg for the
relevant time periods.
6. Property portfolio and valuation information relating
to NewRiver is from the valuation reports produced by each of Knight Frank and
Colliers as set out in Appendix 4 to this announcement.
7. Property portfolio and valuation information relating
to Capital & Regional is from the valuation report produced by Knight
Frank and CBRE as set out in Appendix 4 to this announcement.
8. The balance sheet financial information (excluding the
property valuations) relating to Capital & Regional is extracted from the
unaudited interim results of Capital & Regional for the six month period
ended 30 June 2024 published on 1 August 2024.
9. The profit and loss financial information relating to
Capital & Regional is extracted from the audited consolidated financial
statements of Capital & Regional for the year ended 30 December 2023
published on 30 April 2024, adjusted for the annualised impact of the
acquisition of The Gyle, Edinburgh, which completed in September 2023, and the
disposal of Luton and Redditch, which completed in March 2023 and September
2023, respectively.
10. The financial information relating to NewRiver is
extracted from the audited consolidated financial statements of NewRiver for
the year ended 31 March 2024 published on 21 June 2024 and includes the
proportionate share of joint ventures and associates (note that debt maturity
does not include the impact of associate debt) and is adjusted for:
10.1 the disposals in the Napier joint venture in June 2023
(adjustment only made to profit and loss financial information);
10.2 the disposal of two Work Out assets during the financial year
ended 31 March 2024 (adjustment only made to profit and loss financial
information);
10.3 the disposal of one Work Out asset during the financial year
ending 31 March 2025 (adjustment made to profit and loss and balance sheet
financial information); and
10.4 the acquisition of Ellandi during the financial year ending
31 March 2025 (adjustment made to profit and loss and balance sheet financial
information).
11. UK Retail, UK Shopping Centres and UK Industrial sector
average equivalent yields are extracted from the MSCI quarterly index as at
June-2024.
12. ICR is calculated by comparing actual net property income
received versus net cash interest payable on a 12 month look-back basis.
13. LTV is net debt divided by gross asset value per the
Knight Frank valuation reports included in Appendix 4 to this announcement.
14. All occupational metrics including, Occupational Cost
Ratio, in-store sales growth, distance travelled and shopper average net
income are calculated based on information provided by Lloyds Bank on customer
spend, covering 98 per cent. by value of Capital & Regional's assets and
67 per cent. by value of NewRiver's assets.
15. Combined portfolio statistics are calculated by the
addition of the relevant figures for NewRiver and Capital & Regional on
the basis outlined above.
16. Combined capital structure statistics are calculated by
the addition of the relevant figures for NewRiver and Capital & Regional
adjusted for:
16.1 the cash component of the consideration payable pursuant to
the Combination;
16.2 estimated transaction costs;
16.3 estimated net pre-tax run-rate recurring annual cost
synergies of £6.2 million (see Appendix 3 to this announcement for the
Quantified Financial Benefit Statement);
16.4 the estimated net proceeds of the Placing; and
16.5 the repayment of Capital & Regional's Hemel Hempstead,
Ilford and Edinburgh secured loan facilities totalling £59 million.
17. For the purposed of calculating the relevant shareholdings
in NewRiver following the completion of any Combination in the event that a
firm offer is made, the enlarged issued ordinary share capital of NewRiver is
assumed to include 62,737,200 new NewRiver Shares proposed to be issued in
connection with the Placing.
appendix 2
VALUATION REPORTS
Part A - Knight Frank Valuation Report (NewRiver Portfolio)
NewRiver REIT plc
Valuation date: 30 June 2024
Important Notice to all readers of this report
Unless you are the Client named within this report, or have been explicitly
identified by us as a party to whom we owe a responsibility, a duty of care
and who is entitled to rely on this report, Knight Frank LLP does not owe or
assume any duty of care to you in respect of the contents of this report and
you are not entitled to rely upon it.
NewRiver REIT plc
89 Whitfield Street
London
W1T 4DE (hereinafter referred to as the "Client" and the "Offeror")
Jefferies International Limited (acting as lead financial adviser and joint
corporate broker to the Client)
100 Bishopsgate
London
EC2N 4JL (hereinafter referred to as the "Offeror Financial Adviser")
Panmure Liberum Limited (acting as sole sponsor and joint corporate broker to
the Client)
Ropemaker Place
Level 12
25 Ropemaker Street
London
EC2Y 9LY (hereinafter referred to as the "Offeror Sponsor")
Kinmont Limited (acting as joint financial adviser to the Client)
5 Clifford Street
London
W1S 2LG
Shore Capital Stockbrokers Limited (acting as joint corporate broker to the
Client)
Cassini House
57 St James's Street
London
SW1A 1LD
(together, hereinafter referred to as the "Offeror Addressees")
Capital & Regional plc
Strand Bridge House
138-142 Strand
London
WC2R 1HH (hereinafter referred to the "Offeree")
Numis Securities Limited (trading as Deutsche Numis) (acting as joint
financial adviser and joint corporate broker to Offeree)
45 Gresham Street
London
EC2V 7BF
Stifel Nicolaus Europe Limited (acting as joint financial adviser and joint
corporate broker to Offeree)
4(th) Floor
150 Cheapside
London
EC2V 6ET
(together, hereinafter referred to as the "Offeree Joint Financial Advisers")
(each an "Addressee" and together the "Addressees")
Our Ref: 1148756
Date of issue: 18 September 2024
Dear Sir/Madam
Valuation Report in respect of the properties of NewRiver REIT plc as at 30
June 2024 for inclusion in a Rule 2.4 Announcement, Rule 2.7 Announcement,
Scheme Document and Prospectus ("Valuation Report")
Further to your instructions, we are pleased to provide our Valuation Report
in respect of the freehold, heritable or leasehold interests in the properties
("Properties") set out in Appendix 1 (Schedule of Properties) below in
connection with inclusion in a Rule 2.4 Announcement, Rule 2.7 Announcement,
Scheme Document to be published by the Offeree and a Prospectus to be
published by the Offeror, in connection with a possible acquisition of the
entire issued, and to be issued, share capital of the Offeree by the Offeror
(the "Transaction").
Knight Frank
55 Baker Street, London, W1U 8AN
+44 20 7629 8171
knightfrank.co.uk
Knight Frank is the trading name of Knight Frank LLP. Knight Frank LLP is a
limited liability partnership registered in England and Wales with registered
number OC305934. Our
registered office is at 55 Baker Street, London W1U 8AN where you may look at
alist of members' names. If we use the term 'partner' when referring to one
of our representatives, that person will either be a member, employee, worker
or consultant of Knight Frank LLP and not a partner in a partnership.
Signed for and on behalf of Knight Frank LLP
Gavin Spreyer MRICS
RICS Registered Valuer
Partner, Valuation & Advisory
gavin.spreyer@knightfrank.com
T +44 20 7861 1585
M +44 7771 635 198
Tom Withey MRICS
RICS Registered Valuer
Partner, Valuation & Advisory
tom.withey@knightfrank.com
T +44 20 7861 1583
M +44 7500 092 478
Tom Withey MRICS
RICS Registered Valuer
Partner, Valuation & Advisory
tom.withey@knightfrank.com
T +44 20 7861 1583
M +44 7500 092 478
1. About this report
Engagement of Knight Frank LLP
1.1 This Valuation Report sets out our valuation, as at 30
June 2024 ("Valuation Date"), of the Properties ("Valuation"). This Valuation
Report has been prepared in accordance with our Terms of Engagement letter
dated 13 September 2024 addressed to the Addressees, and our General Terms of
Business for Valuation Services (together the "Agreement").
Client
1.2 We have been instructed to prepare this Valuation Report
by NewRiver REIT plc. However as set out above, this Valuation Report has also
been addressed to other Addressees.
Valuation standards
1.3 The Valuation has been undertaken in accordance with and
complies with: (a) the current editions of RICS Valuation - Global Standards,
which incorporate the International Valuation Standards, and the RICS UK
National Supplement. References to the "Red Book" refer to either or both of
these documents, as applicable; (b) Rule 29 of the City Code on Takeovers and
Mergers (the "Code") as issued by the UK Panel on Takeovers and Mergers; (c)
paragraphs 128-130 of the Financial Conduct Authority ("FCA") Primary Market
Technical Note 619.1 (the "FCA Technical Note"); and (d) Rules 5.4.5 and 5.4.6
of the UK Prospectus Regulation Rules published by the FCA. This Valuation
Report is an unqualified valuation report prepared in accordance with the
requirements of Rule 29 of the Code by a valuer who has had access to
sufficient information to prepare it.
1.4 The Properties have been valued by a valuer who is qualified for
the purposes of the Valuation in accordance with Rule 29 of the Code. For the
purposes of this Valuation Report, "UK Prospectus Regulation Rules" shall mean
the prospectus regulation rules made by the FCA for the purposes of part 6 of
the Financial Services and Markets Act 2000, as amended.
Status and experience of valuer
Valuer and expertise
1.5 The valuers, on behalf of Knight Frank LLP, with the
responsibility for this Valuation Report are Gavin Spreyer MRICS, RICS
Registered Valuer and Tom Withey MRICS, RICS Registered Valuer ("Responsible
Valuers"). Parts of the Valuation have been undertaken by additional valuers
as listed on our file.
1.6 We confirm that the Responsible Valuers and any
additional valuers who value the Properties meet the requirements of the Red
Book and Rule 29.3(a)(iii) of the Code in having sufficient current knowledge
of the particular market and the skills and understanding to undertake the
Valuation and prepare this Valuation Report competently and are appropriately
qualified for the purposes of the Valuation as required by Rule 29.3(a)(ii) of
the Code and are independent of the parties to the offer as required by Rule
29.3(a)(i) of the Code.
1.7 We confirm that we are not aware of any reason why we
would not satisfy the requirements of Rule 29.3(a)(i) of the Code.
Conflicts of Interest: Declaration and Disclosures
1.8 We confirm that the Responsible Valuers and additional valuers
meet the requirements of the Red Book, having sufficient current knowledge of
the particular market and the skills and understanding to undertake the
Valuation competently.
1.9 We confirm that we have no material interest in the
Client and we have acted as an External Valuer for the purpose of valuing the
Properties pursuant to the terms of our letter of engagement dated 14 August
2017.
1.10 This Valuation Report has been vetted as part of Knight
Frank LLP's quality assurance procedures.
1.11 We recognise and support the RICS Rules of Conduct and have
procedures for identifying conflicts of interest.
Independence
1.12 Knight Frank LLP currently values the Properties, for
financial reporting purposes, on behalf of the Client. The total fees for this
assignment, earned by Knight Frank LLP (or other companies forming part of the
same group of companies within the UK) from the Client (or other companies
within the UK) is less than 5.0% of the total UK revenues. It is not
anticipated that there will be a material increase in the proportion of the
fees payable, or likely to be payable, by the Client.
1.13 Other than these valuation services, Knight Frank LLP has
no material involvement with the assets being valued and we confirm that we
can report without any material conflict.
Use of this Valuation
Purpose of valuation
1.14 The Valuation and this Valuation Report are each provided
solely for the purpose of:
(A) inclusion in an announcement proposed to be made by the Offeror
pursuant to Rule 2.4 of the Code in connection with the Transaction (the "Rule
2.4 Announcement");
(B) inclusion in an announcement proposed to be made by the Offeror
and the Offeree pursuant to Rule 2.7 of the Code in connection with the
Transaction (the "Rule 2.7 Announcement");
(C) inclusion in a scheme circular to be published by the Offeree
in connection with the Transaction (the "Scheme Document");
(D) inclusion in a prospectus to be published by the Offeror in
connection with the Transaction and the issue and allotment of new shares in
the capital of the Offeror pursuant, amongst other things, to the terms of the
Transaction (the "Prospectus");
(E) inclusion and/or reference to it in any other announcements,
documents and/or supplementary documents required to be released by the
Offeror and/or the Offeree pursuant to the Code and which directly relate to
the Transaction (each a "Code Document"); and
(F) publication on the Offeror's website and the Offeree's website in
accordance with the requirements of Rule 26.3 of the Code and the UK
Prospectus Regulation Rules,
(together, the "Purpose").
Reliance
1.15 This Valuation Report has been prepared for the Addressees only
and is for the use of, and may be relied upon by, the Addressees for the
Purpose. Notwithstanding the General Terms, we acknowledge that this Valuation
Report will also be for the use of the shareholders of the Offeror and the
Offeree for the Purpose set out above.
1.16 Save for: (a) the Addressees; and (b) any responsibility arising
under the Code and/or the UK Prospectus Regulation Rules to any person as and
to the extent there provided, in accordance with Clauses 3 & 4 of the
General Terms and to the fullest extent permitted by law, we do not assume any
responsibility and will not accept any liability to any other person for any
loss suffered by any such other person as a result of, arising out of, or in
accordance with this Valuation Report or our statement, required by and given
solely for the purposes of complying with the UK Prospectus Regulation Rules
and Rule 29 of the Code.
Disclosure & publication
1.17 The Valuation has been prepared for the Client and in
accordance with the Agreement which governs its purpose and use. As stated in
the Agreement, this Valuation Report is confidential to the Addressees and
must not be disclosed to any person other than for the Purpose without our
express written consent. Other than for the Purpose, neither the whole, nor
any part of this Valuation Report nor any reference thereto may be included in
any prospectus, listing particulars, published document, circular or statement
nor published in any way without our prior written approval of the form or
context in which it may appear.
1.18 Notwithstanding paragraph 1.17 above, this Valuation
Report may be disclosed as set out below:
Subject to the terms and conditions (but disregarding for these purposes
clauses 4.3 to 4.6 (inclusive) of the General Terms) of the Agreement and our
approval of the form and context thereof, we hereby confirm that we will
authorise and consent to the disclosure of this Valuation Report:
i. as may be required by any applicable court of competent
jurisdiction or other competent judicial or governmental body or any
applicable law or regulation or pursuant to government action, regulatory
requirement or request;
ii. to each Addressee's affiliates and each Addressee's
affiliates' respective directors, officers, employees, agents, professional
advisers, insurers, auditors and bankers that need to see the Valuation in
connection with the Purpose;
iii. in the case of the Offeror Addressees, in seeking to
establish a defence or otherwise in connection with any actual or threatened
legal or regulatory proceedings or investigation relating to the matters set
out in this Valuation Report or claims that may be brought against them
arising from their roles as financial adviser, sponsor and/or joint corporate
broker (as applicable) to the Offeror;
iv. in the case of the Offeree Joint Financial Advisers, in
seeking to establish a defence or otherwise in connection with any actual or
threatened legal or regulatory proceedings or investigation relating to the
matters set out in this Valuation Report or claims that may be brought against
them arising from their roles as joint financial adviser and/or joint
corporate broker (as applicable) to the Offeree;
v. in investor presentations and other investor education
materials prepared in connection with the Transaction, and in any private
discussions with Investors or other third parties in connection with the
Transaction;
vi. for the Purpose; and
vii. to any Addressee's insurers in respect of any claim or
potential claim relating to the Transaction, but in each case only on the
basis that: (a) such disclosure is made to inform the recipient that Knight
Frank have no duty of care and therefore shall have no liability to the
recipient in respect of the relevant document; and (b) such recipient agrees
not to provide a copy of the document to any other person without the prior
written consent of Knight Frank.
1.19 It is a condition of such disclosure that each party in
receipt of this Valuation Report that is not an Addressee agrees and
acknowledges that this Valuation Report cannot be relied upon by them, and we
do not accept any responsibility, duty of care or liability to them, whether
in contract, tort (including negligence), misrepresentation or otherwise in
respect of the Valuation and the information it contains. For the avoidance
of doubt, nothing in the preceding sentence shall affect our responsibility,
for the purposes of Rule 5.3.2R(2)(f) of the UK Prospectus Regulation Rules,
or under paragraphs 1.15 and 1.16 of this Valuation Report for the information
contained in this Valuation Report.
1.20 This Valuation Report complies with Rule 29 of the Code and we
understand that the publication or reproduction by the Offeror or the Offeree
of this Valuation Report and/or the information contained herein as required
by Rules 26 and 29 of the Code is necessary, including in the Rule 2.4
Announcement, the Rule 2.7 Announcement, the Scheme Document and any Code
Document.
1.21 We confirm that this Valuation Report complies with Rules
5.4.5G and 5.4.6G of the UK Prospectus Regulation Rules and paragraphs 128 to
130 of the FCA Technical Note.
1.22 We confirm that the information contained in the Prospectus
which is extracted from this Valuation Report is accurate, balanced and
complete and is not misleading or inconsistent with this Valuation Report as
prepared by us and has been properly extracted, derived or computed from this
Valuation Report.
1.23 The Addressees agree and acknowledge that we shall have no
liability for any error, omission or inaccuracy in this Valuation Report to
the extent resulting from our reliance on information provided by or on behalf
of the Client unless otherwise stated. Notwithstanding the above, we highlight
the restricted nature of this instruction, in accordance with the Red Book; as
a result the reliance that can be placed on the Valuation is limited.
Verification
1.24 We recommend that before any financial transaction is
entered into based upon the Valuation, you obtain verification of any
third-party information contained within this Valuation Report.
1.25 We would advise you that whilst we have valued the
Properties reflecting current market conditions, there are certain risks which
may be, or may become, uninsurable. Before undertaking any financial
transaction based upon this Valuation, you should satisfy yourselves as to the
current insurance cover and the risks that may be involved should an uninsured
loss occur.
Limitations on liability
1.26 Knight Frank LLP's total liability for any direct loss or
damage (whether caused by negligence or breach of contract or otherwise)
arising out of or in connection with this Valuation is limited in accordance
with the terms of the Agreement. Knight Frank LLP accepts no liability for any
indirect or consequential loss or for loss of profits.
1.27 We confirm that we hold adequate and appropriate PII cover
for this instruction.
1.28 No claim arising out of or in connection with this
Valuation may be brought against any member, employee, partner or consultant
of Knight Frank LLP. Those individuals will not have a personal duty of care
to any party and any claim for losses must be brought against Knight Frank
LLP.
1.29 Nothing in this Valuation shall exclude or limit our
liability in respect of fraud or for death or personal injury caused by our
negligence or for any other liability to the extent that such liability may
not be excluded or limited as a matter of law or regulation.
Scope of work
General Scope of Valuation Work
1.30 The Valuation has been undertaken, and this Valuation Report
prepared, in accordance with the General Scope of Valuation Work appended to
this Valuation Report at Appendix 2.
Information to be relied upon
1.31 We have relied upon the information previously provided to us by
the Client, or by third parties in respect of the 30 June 2024 Valuation and
will assume it to be correct for the purposes of the Valuation unless you
inform us otherwise, subject only to any valuation that we have agreed to
undertake.
1.32 Where we express an opinion in respect of (or which depends
upon) legal issues, any such opinion must be verified by your legal advisors
before any Valuation can be relied upon.
1.33 We are instructed to rely on floor areas and tenancy
information provided by the Client. We have not read lease agreements nor
verified accordance between tenancy schedule and lease terms.
1.34 Knight Frank LLP cannot be held liable as regards the legal
description of the Properties, its use, non-compliance with statutory
requirements, technological and natural risks, the areas taken into account,
the existence of concealed defects, presence of asbestos, adverse ground
condition, presence of soil contamination, presence of insects, noxious
animals or plants, rot, or deleterious materials, etc. This Valuation Report
comments on the above on the basis of Technical or Environmental reports, if
provided.
Inspections
1.35 In undertaking the Valuation and in our role as External
Valuers under the existing statutory valuation, we have carried out an
inspection of the Properties internally and externally. Our inspections of all
the Properties have been undertaken within the last six months.
Information Provided
1.36 In this Valuation Report we have been provided with
information by the Client, its advisors and other third parties. We have
relied upon this information as being materially correct in all aspects.
1.37 In the absence of any documents or information provided, we
have had to rely solely upon our own enquiries as outlined in this Valuation
Report.
1.38 We have assumed there to be good and marketable titles to the
Properties. We have made oral enquiries with the Client where appropriate and
have taken account, insofar as we are aware, of unusual outgoings, planning
proposals and onerous restrictions or local authority intentions which affect
the Properties. However, this information has been provided to us on the basis
that it should not be relied upon.
1.39 We have been supplied with details of tenure and tenancies
and have valued on the basis that there are no undisclosed matters which would
affect our valuation.
1.40 We have not undertaken any building surveys or
environmental audits and are therefore unable to report that the Properties
are free of any structural fault, rot, infestation or defects of any other
nature, including inherent weaknesses due to the use in construction of
materials now suspect. No tests were carried out on any of the technical
services. However, we have reflected any apparent wants of repair in our
opinion of value as appropriate.
1.41 The Properties have been valued individually, not as part
of a portfolio.
Assumptions
1.42 We have assumed, except where we have been informed to the
contrary, that there are no adverse ground or soil conditions or environmental
contaminations which would affect the present or future use of the Properties
and that the load bearing qualities of the site of each property are
sufficient to support the buildings constructed or to be constructed thereon.
1.43 The valuation of the long leasehold interest held in The
Martlets, Burgess Hill, RH15 9NN has been undertaken on a residual basis
reflecting the partial refurbishment and part re-development of the property.
Planning consent dated 2 July 2021 exists and has been implemented and the
intention is to construct 100 one bedroom and 72 two bedroom apartments,
together with commercial accommodation extending to 10,358 sq m (111,496 sq
ft) and 16 additional residential units above. There are proposals to sell the
land for the development of the 172 residential apartments, subject to
restructure of the title. The total gross development value of the
refurbishment/redevelopment is in the order of £77,150,000 with the total
construction costs including professional fees and finance of £63,400,000.
1.44 With regard to the valuation of the freehold interest in
Grays Shopping Centre, Grays, RM17 6QE we have had regard to the existing
occupational profile. The Client is pursuing the potential for a comprehensive
residential redevelopment and has submitted a planning application for up to
860 residential units, subject to viability. The valuation is based on the
existing use value of the property but has regard to the 'hope' for future
redevelopment that is implied in the scheme yield.
1.45 Since 30 June 2024 we are aware that Carpetright Plc which
occupy a retail warehouse at Vale Gate Retail Park, Cardiff, CF5 6EH, have
served notice of intent to file for administration. The full implications of
any potential administration are as yet unknown and our valuation currently
reflects the uncertainty of the situation.
1.46 We have been informed that there was a fire at Blackburn
Retail/Leisure Park, Lower Audley Street, Blackburn, BB2 3DY on 6 May 2023
affecting Unit 2 which was vacant at the date of the fire and Unit 4 which was
let to the tenant, B&M Retail Limited. We understand that Unit 4 has been
subject to substantial damage and temporary closure and Unit 2 was vacant and
also subject to substantial damage. We understand that all insurance
re-instatement policies are in place for both Unit 2 and Unit 4 and there is a
sufficient level of rent cover on Unit 4, until such time as the building is
fully repaired. We have valued both Unit 2 and Unit 4 adopting the investment
method of valuation and at the date of valuation Unit 2 was being fitted out
by the new tenant Jollyes and Unit 4 was not occupied by B&M and was still
undergoing repair works.
1.47 The valuation of the Sprucefield Retail Park, Hillsborough Road,
Lisburn, BT27 5UQ and The Moor, Sheffield, South Yorkshire, S1 4PF presented
within this valuation report is the 100% freehold or long leasehold interests
held in the properties by the respective partnerships. The valuation does
not detail the proportionate ownership and value thereof held by the Client.
1.48 In valuing the property at the Sprucefield Retail Park,
Hillsborough Road, Lisburn, BT27 5UQ, terms have been agreed, subject to
planning, for Lidl to acquire 2.70 acres of land for the development of a
27,000 sq ft foodstore. There is also surplus development land without
planning to which we have applied a value of £1m. We have also had regard
to the anticipated practical completion of three retail units in September
2024 pre-let to SC Hospitality Ltd (t/a Slim Chickens), Nandos Chickenland Ltd
(t/a Nandos), and Tolren Ltd (t/a Starbucks) and have deducted the remaining
construction costs of £1,866,999.
2. Valuation
Methodology
2.1 The Valuation has been undertaken using appropriate valuation
methodology and our professional judgement.
Comparative method
2.2 In undertaking the Valuation, we have made our
assessment on the basis of a collation and analysis of appropriate comparable
transactions, together with evidence of demand within the vicinity of the
subject properties. With the benefit of such transactions we have then
applied these to the Properties, taking into account size, location, aspect
and other material factors.
Investment method
2.3 The Valuation has been carried out using the comparative and
investment methods. In undertaking the Valuation, we have made our
assessment on the basis of a collation and analysis of appropriate comparable
investment and rental transactions, together with evidence of demand within
the vicinity of the subject Properties. With the benefit of such transactions
we have then applied these to the Properties, taking into account size,
location, terms, covenant and other material factors.
Valuation bases
2.4 The basis of value for the Valuation as required by the Code is
Market Value and therefore these valuations have been prepared on a Market
Value basis.
Market Value
2.5 Market Value is defined within RICS Valuation - Global
Standards as:
"The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
Portfolios
2.6 In a valuation of a property portfolio, we have valued
the individual properties separately and we have assumed that the individual
properties have been marketed in an orderly way.
Market Value
Market Value of Non Partnership Properties
2.7 We are of the opinion that the aggregate Market Value of
the freehold, heritable and long leasehold interests in the Properties,
subject to the existing tenancies on the assumptions highlighted above, as at
the Valuation Date is:
£300,455,000 (Three Hundred Million, Four Hundred and Fifty Five Thousand
Pounds).
Market Value of Partnership Properties
2.8 We are of the opinion that the aggregate Market Value of
the freehold and long leasehold interests in the Properties, subject to the
existing tenancies on the assumptions highlighted above, as at the Valuation
Date is:
£99,200,000 (Ninety Nine Million, Two Hundred Thousand Pounds).
2.9 For the purposes of Rule 29.5 of the Code, we confirm
that in our opinion the current valuation of the Properties as at the date of
this Valuation Report would not be materially different from the valuation of
the Properties as at the Valuation Date.
2.10 We are not aware, as a result of our role as an External
Valuer of the Properties of any matter which would materially affect the
Market Value of the Properties which is not disclosed in this Valuation Report
(subject to the assumptions set out in this Valuation Report) and we are not
aware of any matter in relation to this Valuation Report that we believe
should be and has not yet been brought to the attention of the Addressees.
2.11 For the purposes of paragraph 130(vi) of the FCA Technical
Note, we consider the: (i) 0.20% difference in respect of the Non Partnership
Properties; and (ii) -0.77% difference in respect of the Partnership
Properties, between the valuation figures in this Valuation Report and the
equivalent figures reported in the Client's latest published annual or
consolidated accounts for 31 March 2024 to be as a result of the occupational
changes, capital expenditure and market movements.
Responsibility
2.12 For the purposes of the Code, we are responsible for this
Valuation Report and accept responsibility for the information contained in
this Valuation Report and confirm that to the best of our knowledge (having
taken all reasonable care to ensure this is the case), the information
contained in this Valuation Report is in accordance with the facts and
contains no omissions likely to affect its import. This Valuation Report
complies with and is prepared in accordance with, and on the basis of, the
Code. We authorise its contents for the purposes of Rule 29 of the Code.
Knight Frank LLP has given and has not withdrawn its consent to the inclusion
of this Valuation Report in the Rule 2.4 Announcement, the Rule 2.7
Announcement, the Scheme Document and in the Prospectus.
2.13 We accept responsibility (including for the purpose of Rule
5.3.2R(2)(f) of the UK Prospectus Regulation Rules) for the information
contained in this Valuation Report and to the best of our knowledge, the
information contained in this Valuation Report is in accordance with the facts
and the Valuation Report makes no omission likely to affect its import.
Consent
2.14 Knight Frank LLP has given and has not withdrawn its
consent to the inclusion of this Valuation Report in the Rule 2.4
Announcement, the Rule 2.7 Announcement, the Scheme Document and in the
Prospectus published by the Client and/or the Offeree in the form and
context in which it is included.
2.15 We consent to the inclusion of the Valuation and this
Valuation Report and any extracts or references thereto in the Prospectus and
the reference to our name in the form and context in which they are included
in the Prospectus (subject to us first approving the form and context in which
our Valuation Report will appear).
Appendix 1 List of Properties
Property Address - Retail Warehouse Tenure Sector Date of Inspection
Hollywood Retail & Leisure, Barrow-In-Furness, LA14 2NA Freehold Retail Warehouses 01/07/2024
Waterfront Retail Park, Barry, CF63 4BA Long Leasehold Retail Warehouses 07/02/2024
Blackburn Retail/Leisure Park, Lower Audley Street, Blackburn, BB2 3DY Long Leasehold Retail Warehouses 02/07/2024
Enterprise 5 Retail Park, Bradford Road, Bradford, BD10 8EG Long Leasehold Retail Warehouses 02/07/2024
Vale Gate Retail Park, Cardiff, CF5 6EH Freehold Retail Warehouses 07/02/2024
Rishworth Centre & Railway St, Dewsbury, WF12 8EQ Freehold Retail Warehouses 02/07/2024
Cuckoo Bridge Retail Park, Glasgow Road, Dumfries, DG2 9BF Heritable Retail Warehouses 01/07/2024
Eastham Point, New Chester Road Wirral, Eastham, CH62 8HJ Freehold Retail Warehouses 02/07/2024
South Lakeland Retail Park, Appleby Road, Kendal, LA9 6DU Long Leasehold Retail Warehouses 01/07/2024
Kirkstall Retail Park, 1 Savins Mill Way, Leeds, LS5 3RP Long Leasehold Retail Warehouses 02/07/2024
The Speke Retail Park, Speke, Liverpool, L24 2WZ Long Leasehold Retail Warehouses 02/07/2024
Property Address - Retail Warehouse (Partnership Property) Tenure Sector Date of Inspection
Sprucefield Retail Park, Hillsborough Road, Lisburn, BT27 5UQ Freehold Retail Warehouses 14/08/2024
Property Address - Shopping Centres & Single Retail Unit Tenure Sector Date of Inspection
60-64 Church Walk, Burgess Hill, RH15 9AS Freehold Single shop unit with vacant upper parts 30/06/2024
The Martlets, Burgess Hill, RH15 9NN Long Leasehold Former shopping centre for Development/Refurbishment 30/06/2024
Locks Heath Shopping Village, Fareham, SO31 6DX Freehold Shopping centre 29/06/2024
Grays Shopping Centre, Grays, RM17 6QE Freehold Shopping centre 28/06/2024
Priory Meadow Shopping Centre, Hastings, TN34 1PH Long Leasehold Shopping centre 30/06/2024
The Avenue Shopping Centre, Newton Mearns, G77 6AA Heritable Shopping centre 01/07/2024
Abbey Centre, Newtownabbey, BT37 9UH Freehold Shopping centre 02/07/2024
The Forum Shopping Centre, Wallsend, NE28 8JP Freehold Shopping centre 02/07/2024
Property Address - Shopping Centre (Partnership Property) Tenure Sector Date of Inspection
The Moor, Sheffield, S1 4PF Long Leasehold Shopping Centre 14/08/2024
Appendix 2 General Scope of Valuation Work
General Scope of Valuation Work
As required by the RICS Valuation - Global Standards (the "Red Book") this
General Scope of Valuation Work describes information we will rely on, the
investigations that we will undertake, the limits that will apply to those
investigations and the assumptions we will make, unless we are provided with
or find information to the contrary.
Definitions
"Assumption" is something which it is agreed the valuer can reasonably accept
as being true without specific investigation or verification.
"Property" is the interest which we are instructed to value in land
including any buildings or other improvements constructed upon it.
"Valuation" shall mean any valuation report, supplementary report or
subsequent/update report, produced pursuant to this engagement and any other
replies or information we produce in respect of any such report and/or any
relevant property.
1. Property to be valued
1.1 We will exercise reasonable care and skill (but will not have an
absolute obligation to you) to ensure that the Property, identified by the
address provided in your instructions, is the Property inspected by us and
included within our Valuation. If there is ambiguity as to the Property
address, or the extent of the Property to be valued, this should be drawn to
our attention in your instructions or immediately upon receipt of our
Valuation.
1.2 We will rely upon information provided by you or your legal advisers
relating to the Property to be valued, including any tenancies, sub-tenancies
or other third-party interests. Any information on title and tenure we are
provided with by a third party during the course of our investigations will be
summarised in our Valuation but will be subject to verification by your legal
advisers. We will be under no obligation to make any searches of publicly
available land registers. We will not make or commission any investigations
to verify any of this information. In particular, we will not investigate or
verify that :
(a) all title information relied upon and referred to in our Valuation is
complete and correct,
(b) all documentation is satisfactorily drawn,
(c) there are no undisclosed onerous conditions or restrictions that could
impact on the marketability of the Property valued, and
(d) there is no material litigation pending, relating to the Property
valued.
1.3 Where we provide a plan of the Property in our Valuation this is for
identification only. While the plan reflects our understanding based on the
information provided to us it must not be relied upon to define boundaries,
title or easements.
1.4 Our Valuation will include those items of plant and machinery
normally considered to be part of the service installations to a building and
which would normally pass with the Property on a sale or letting. We will
exclude all other items of process plant, machinery, trade fixtures and
equipment, chattels, vehicles, stock and loose tools, and any tenant's
fixtures and fittings.
1.5 Unless agreed otherwise in writing we will neither investigate nor
include in our Valuation any unproven or unquantified mineral deposits, felled
timber, airspace or any other matter which may or may not be found to be part
of the Property but which would not be known to a buyer or seller on the
valuation date.
1.6 Unless agreed otherwise our Valuation will make the Assumption that
all parts of the Property occupied by the current owner on the valuation date
would be transferred with vacant possession and any tenancies, sub-tenancies
or other third party interests existing on the valuation date will continue.
1.7 Where requested legal title and tenancy information is not provided
in full, in the absence of any information provided to the contrary, our
Valuation will make the Assumption that the subject Property has good title
and is free from any onerous restrictions and/or encumbrances or any such
matter which would diminish its value.
2. Portfolios
2.1 Where instructed to value a portfolio of properties, unless
specifically agreed with you otherwise, we will value each Property separately
on the basis that it is offered individually to the market.
3. Building specification and condition
3.1 We will note the general condition of any building and any building
defect brought to our attention and reflect this in our Valuation. We will
not undertake a detailed investigation of the materials or methods of
construction or of the condition of any specific building element. We will
not test or commission a test of service installations. Unless we become
aware during our normal investigations of anything to the contrary and mention
this in our Valuation, our Valuation will , make the Assumption that:
(a) any building is in a condition commensurate with its age, use and design
and is free from significant defect,
(b) no construction materials have been used that are deleterious, or likely
to give rise to structural defects,
(c) no potentially hazardous or harmful materials are present, including
asbestos,
(d) all relevant statutory requirements relating to use, construction and
fire safety have been complied with,
(e) any building services, together with any associated computer hardware
and software, are fully operational and free from impending breakdown or
malfunction and
(f) the supply to the building of electricity, data cable network and
water, are sufficient for the stated use and occupancy.
3.2 If you require information on the structure or condition of any
building our specialist building surveyors can provide a suitable report.as a
separate service.
4. Environment and sustainability
4.1 Our Valuation will reflect the market's perception of the
environmental performance of the Property and any identified environmental
risks as at the valuation date. This may include reflecting information you
provide to us that has been prepared by suitably qualified consultants on
compliance of existing or proposed buildings with recognised sustainability
metrics. Where appropriate we will research any freely available information
issued by public bodies on the energy performance of existing buildings.
4.2 We will investigate whether the Property has a current Energy
Performance Certificate on the relevant government register and report our
findings. As part of our valuation service we will not advise on the extent
to which the Property complies with any other Environmental, Social or
Governance (ESG) metrics or to what extent the building, structure, technical
services, ground conditions, will be impacted by future climate change events,
such as extreme weather, or legislation aimed at mitigating the impact of such
events. If required KF may be able to advise on ESG considerations and their
long-term impact on a Property as a separate service.
5. Ground conditions and contamination
5.1 We may rely on any information you provide to us about the findings
and conclusions of any specialist investigations into ground conditions or any
contamination that may affect the Property. Otherwise our investigations
will be limited to research of freely available information issued by
Government Agencies and other public bodies for flood risk, recorded mining
activity and radon. We will also record any common sources or indicators of
potential contamination observed during our inspection.
5.2 Unless specifically instructed by you to do so, we will not
commission specialist investigations into past or present uses either of the
Property or any neighbouring property to establish whether there is
contamination or potential for contamination, or any other potential
environmental risk. Neither will we be able to advise on any remedial or
preventive measures.
5.3 We will comment on our findings and any other information in our
possession or discovered during our investigations in our Valuation.
5.4 Unless we become aware of anything to the contrary and mention this
in our Valuation, for each Property valued our Valuation will make the
Assumption that:
(g) the site is physically capable of development or redevelopment, when
appropriate, and that no extraordinary costs will be incurred in providing
foundations and infrastructure,
(h) there are no archaeological remains on or under the land which could
adversely impact on value,
(i) the Property is not adversely affected by any form of pollution or
contamination,
(j) there is no abnormal risk of flooding,
(k) there are no high voltage overhead cables or large electrical supply
equipment affecting the Property
(l) the Property does not have levels of radon gas that will require
mitigation work, and
(m) there are no invasive species present at the Property or within close
proximity to the Property.
(n) There are no protected species which could adversely affect the use of
the Property.
6. Planning and highway enquiries
6.1 We may research freely available information on planning history and
relevant current policies or proposals relating to any Property being valued
using the appropriate local authority website. We will not commission a
formal local search. Our Valuation will make the Assumption that any
information obtained will be correct, but our findings should not be relied on
for any contractual purpose.
6.2 Unless we obtain information to the contrary, Our Valuation will
make the Assumption that:
(o) the use to which the Property is put is lawful and that there is no
pending enforcement action,
(p) there are no local authority proposals that might involve the use of
compulsory purchase powers or otherwise directly affect the Property.
6.3 We do not undertake searches to establish whether any road or
pathways providing access to the Property are publicly adopted. Unless we
receive information to the contrary or have other reason to suspect an
adjoining road or other access route is not adopted, our Valuation will make
the Assumption that all such routes are publicly adopted.
7. Other statutory and regulatory requirements
7.1 A property owner or occupier may be subject to statutory regulations
depending on their use. Depending on how a particular owner or occupier uses
a building, the applicable regulations may require alterations to be made to
buildings. Our valuation service does not include identifying or otherwise
advising on works that may be required by a specific user in order to comply
with any regulations applicable to the current or a proposed use of the
Property. Unless it is clear that similar alterations would be required by
most prospective buyers in the market for a property, our Valuation will make
the Assumption that no work would be required by a prospective owner or
occupier to comply with regulatory requirements relating to their intended
use.
7.2 We will not investigate or comment on licences or permits that may
be required by the current or any potential users of the Property relating to
their use or occupation.
8. Measurements
8.1 Where building floor areas are required for our valuation, unless we
have agreed to rely on floor areas provided by you or a third party, we will
take measurements and calculate the appropriate floor areas for buildings in
accordance with the RICS Property Measurement Professional Standard. These
measurements will either be wholly taken by us during our inspection or from
scaled drawings provided to us and checked by sample measurements on site.
The floor areas will be within a tolerance that is appropriate having regard
to the circumstances and purpose of the valuation instruction.
8.2 Where required, any site areas will be calculated from our
understanding of the boundaries using digital mapping technology, subject to
clause 1.3 above.
9. Investment properties
9.1 Where the Property valued is subject to a tenancy or tenancies, we
will have regard to the market's likely perception of the financial status and
reliability of tenants in arriving at our valuation. We will not undertake
detailed investigations into the financial standing of any tenant. Unless
advised by you to the contrary our Valuation will be make the Assumption that
there are no material rent arrears or breaches of other lease obligations.
10. Development properties
10.1 If we are instructed to value Property for which development,
redevelopment or substantial refurbishment is proposed or in progress, we
strongly recommend that you supply us with build cost and other relevant
information prepared by a suitably qualified construction cost professional,
such as a quantity surveyor. We shall be entitled to rely on such
information in preparing our valuation. If a professional estimate of build
costs is not made available, we will rely on published build cost data but
this must be recognised as being less reliable as it cannot account for
variations in site conditions and design. This is particularly true for
refurbishment work or energy efficiency and environmental upgrades. In the
absence of a professionally produced cost estimate for the specific project we
may need to qualify our report and the reliance that can be placed on our
valuation.
10.2 For Property in the course of development, we will reflect the stage
reached in construction and the costs remaining to be spent at the date of
valuation. We will have regard to the contractual liabilities of the
parties involved in the development and any cost estimates that have been
prepared by the professional advisers to the project. For recently completed
developments we will take no account of any retentions, nor will we make
allowance for any outstanding development costs, fees, or other expenditure
for which there may be a liability.
11. VAT, taxation and costs
11.1 The reported valuation will be our estimate of the price that would be
agreed with no adjustment made for costs that would be incurred by the parties
in any transaction, including any liability for VAT, stamp duty or other
taxes. It is also gross of any mortgage or similar financial encumbrance.
12. Property insurance
12.1 Except to the limited extent provided in clause 3 and clause 4 above we
do not investigate or comment on how potential risks would be viewed by the
insurance market. Our Valuation will be on the Assumption that each Property
would, in all respects, be insurable against all usual risks including fire,
terrorism, ground instability, extreme weather events, flooding and rising
water table at normal, commercially acceptable premiums.
13. Reinstatement cost estimates
13.1 We can only accept a request to provide a building reinstatement cost
estimate for insurance purposes alongside our Valuation of the Property
interest on the following conditions:
(q) the assessment provided is indicative, without liability and only for
comparison with the current sum insured, and
(r) The building is not specialised or listed as being of architectural or
historic importance.
13.2 Otherwise we can provide an assessment of the rebuilding cost by our
specialist building surveyors as a separate service.
14. Legal advice
14.1 We are appointed to provide valuation opinion(s) in accordance with our
professional duties as valuation surveyors. The scope of our service is
limited accordingly. We are not qualified legal practitioners and we do not
provide legal advice. If we indicate what we consider the effect of any
provision in the Property's title documents, leases or other legal
requirements may have on value, we strongly recommend that this be reviewed by
a qualified lawyer before you take any action relying on our valuation.
15. Loan security
15.1 If we are requested to comment on the suitability of the Property as a
loan security we are only able to comment on any risk to the reported value
that is inherent in either its physical attributes or the interest valued.
We will not comment on the degree and adequacy of capital and income cover for
an existing or proposed loan or on the borrower's ability to service payments.
Part B - Colliers Valuation Report (NewRiver Portfolio)
Table of Contents
Valuation
Introduction (#_Toc176771835) (#_Toc176771835)
(#_Toc176771835) 2 (#_Toc176771835)
Purpose of Valuation (#_Toc176771836) (#_Toc176771836)
(#_Toc176771836) 2 (#_Toc176771836)
Valuation Standards (#_Toc176771837) (#_Toc176771837)
(#_Toc176771837) 3 (#_Toc176771837)
Basis of Valuation (#_Toc176771838) (#_Toc176771838)
(#_Toc176771838) 3 (#_Toc176771838)
Date of Valuation (#_Toc176771839) (#_Toc176771839)
(#_Toc176771839) 3 (#_Toc176771839)
Status of Valuer and Conflicts of Interest (#_Toc176771840) 4 (#_Toc176771840)
The Properties (#_Toc176771841) (#_Toc176771841)
(#_Toc176771841) 4 (#_Toc176771841)
Assumptions, Extent of Investigations and Sources of Information
(#_Toc176771842) (#_Toc176771842) (#_Toc176771842) 4 (#_Toc176771842)
Property Inspections & Measurements (#_Toc176771843) (#_Toc176771843)
(#_Toc176771843) 5 (#_Toc176771843)
Tenure
(#_Toc176771844) (#_Toc176771844) (#_Toc176771844) 5 (#_Toc176771844)
Valuation Summary (#_Toc176771845) (#_Toc176771845)
(#_Toc176771845) 6 (#_Toc176771845)
Material changes since the Valuation Date (#_Toc176771846) (#_Toc176771846)
(#_Toc176771846) 6 (#_Toc176771846)
Reliance, Confidentiality and Disclosure (#_Toc176771847) (#_Toc176771847)
(#_Toc176771847) 6 (#_Toc176771847)
18 September 2024
NewRiver REIT Plc
89 Whitfield Street
London W1T 4DE (referred to hereafter as the "Offeror" or "you")
Jefferies International Limited (acting as lead financial adviser and joint
corporate broker to the Offeror)
100 Bishopsgate
London
EC2N 4JL (hereinafter referred to as the "Offeror Financial Adviser")
Panmure Liberum Limited (acting as sole sponsor and joint corporate broker to
the Offeror)
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY (hereinafter referred to as the "Offeror Sponsor")
Kinmont Limited (acting as joint financial adviser to the Offeror)
5 Clifford Street
London
W1S 2LG
Shore Capital Stockbrokers Limited (acting as joint corporate broker to the
Offeror)
Cassini House
57 St James's Street
London
SW1A 1LD (together, hereinafter referred to as the "Offeror Addressees")
Capital & Regional plc
Strand Bridge House
138-142 Strand
London
WC2R 1HH (hereinafter referred to as the "Offeree")
Numis Securities Limited (trading as Deutsche Numis) (acting as joint
financial adviser and joint corporate broker to the Offeree)
45 Gresham Street
London
EC2V 7BF
Stifel Nicolaus Europe Limited (acting as joint financial adviser and joint
corporate broker to the Offeree)
4(th) Floor
150 Cheapside
London
EC2V 6ET (together, hereinafter referred to as the "Offeree Joint Financial
Advisers")
Dear Sirs,
The Client: NewRiver
REIT plc
The Portfolio: 21 Properties
Within The 'NewRiver REIT' Portfolio
Date Of Valuation: 30th June 2024
Introduction
Colliers International Property Consultants Limited (hereafter referred to as
either "Colliers" or "we") have been instructed by NewRiver REIT Plc
(hereafter referred to as either the "Company" or "you") to provide an
indication of value for 21 properties held within the 'NewRiver REIT'
portfolio (the "Properties") as at 30(th) June 2024 (the "Valuation Date")
(the Valuation).
Purpose of Valuation
This valuation report (the "Valuation Report") is provided for the purpose of:
a) inclusion in an announcement proposed to be made by the Company under
Rule 2.4 of the City Code on Takeovers and Mergers as issued by the UK Panel
on Takeovers and Mergers (the "Code") in connection with the proposed
acquisition by the Offeror of the entire issued share capital of the Offeree
(the" Transaction") (the "Rule 2.4 Announcement"). For this purpose, the
Report will be dated with the same date as the Rule 2.4 Announcement;
b) inclusion in an announcement proposed to be made by the Company
and/or the Offeree under Rule 2.7 of the Code in connection with the
Transaction (the "Rule 2.7 Announcement"). For this purpose, the Report will
be dated with the same date as the Rule 2.7 Announcement;
c) inclusion in a scheme circular to be published by the Offeree in
connection with the Transaction effected by way of a scheme of arrangement
under Part 26 of the Companies Act 2006 (the "Scheme Document"). For this
purpose, the Report will be dated with the same date as the Scheme Document;
d) in the event that the Transaction is to be effected by way of a
takeover offer under Part 28 of the Companies Act 2006, inclusion in an offer
document to be published by the Company in connection with the Transaction
(the "Offer Document"). For this purpose, the Report will be dated with the
same date as the Offer Document;
e) inclusion in a combined circular and prospectus to be published by
the Company in connection with the Transaction and the issue and allotment of
new shares in the capital of the Company, amongst other things, pursuant to
the terms of the Transaction (the "Prospectus"). For this purpose, the Report
will be dated with the same date as the Prospectus;
f) inclusion and/or reference to it in any other announcements,
documents and/or supplementary documents required to be released by the
Company and/or the Offeree which directly relate to the Transaction (each a
"Code Document"); and
g) publication on the Offeror's website and/or the Offeree's website in
accordance with the requirements of Rule 26.3 of the Code and the UK
Prospectus Regulation Rules,
(together, the "Purpose").
Therefore, in accordance with PS 2.5 of the Red Book (as defined below) and UK
VPS 3 we have made certain disclosures in connection with this Valuation
instruction and our relationship with you. These are included below.
For the purposes of this Valuation Report, "Prospectus Regulation Rules" means
the prospectus regulation rules made by the FCA for the purposes of part 6 of
the Financial Services and Markets Act 2000, as amended.
Valuation Standards
This Valuation Report has been prepared for a Regulated Purpose as defined in
accordance with the RICS Valuation - Global Standards (2022), which
incorporates the International Valuation Standards, and the RICS UK National
Supplement (2018), in each case current as at the Valuation Date (the "Red
Book"). The Valuation has been undertaken in accordance with and complies with
(i) Rule 29 of the Code : (ii) the FCA's Primary Market Technical Note 619.1;
(iii) the UK Listing Rules; and (iv) the UK Prospectus Regulation Rules (and
in particular Rule 5.4.5G) published by the FCA. This Valuation Report is an
unqualified valuation report prepared in accordance with the requirements of
Rule 29 of the Code by a valuer who has had access to sufficient information
to prepare it.
We confirm that Colliers complies with the competency and objectivity
guidelines under PS 2 of the Red Book and that we have undertaken the
Valuation acting as 'external valuers' qualified for the purposes of this
Valuation.
In order to comply with these Valuation Standards, our files may be subject to
monitoring by the RICS.
Basis of Valuation
The basis of value (as required by the Code) is "Market Value", as defined in
International Valuation Standards 104, Paragraph 30.1 (and the Red Book):
'The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion.'
This is also set out in the General Assumptions and Definitions contained in
Appendix 1 attached to this Valuation Report.
Our Valuation has been undertaken using appropriate valuation methodology and
our professional judgment.
The Valuers' (as defined below) opinion of Market Value was primarily derived
using recent comparable market transactions on arm's length terms, where
available, and appropriate valuation techniques (The Investment Method).
Date of Valuation
30th June 2024.
Status of Valuer and Conflicts of Interest
Colliers has been instructed as External Valuer, as defined in accordance with
the Red Book.
This Valuation has been prepared under the supervision of Richard Barrett BSc
MRICS and Sara Duncan FRICS MRTPI (the "Valuers"). We confirm that the Valuers
(and any additional valuers who may have undertaken parts of the Valuation)
collectively (i) fall within the requirements as to competence as set out in
PS2 of the Red Book and are registered in accordance with the RICS Valuer
Registration Scheme ("VRS") and that they are (a) appropriately qualified; and
(b) meet the requirements of the Red Book, having sufficient current local and
national knowledge of the property market involved and the skills and
understanding to undertake the Valuation and prepare the Valuation Report
competently; and (ii) meet the requirements of Rule 29.3(a)(iii) of the Code
in having sufficient current knowledge of the particular market and the skills
and understanding to undertake the Valuation and prepare this Valuation Report
competently and, are appropriately qualified for the purposes of the Valuation
as required by Rule 29.3(a)(ii) of the Code, and are independent of the
parties to the offer which is the subject of the Transaction as required by
Rule 29.3(a)(i) of the Code. We further confirm that we are not aware of any
reason why we would not satisfy the requirements of Rule 29.3(a)(i) of the
Code.
As fully disclosed to you previously, and as set out in our terms of
engagement (the "Engagement"), we confirm that Colliers have current,
anticipated and previous recent involvement with the Properties as follows:-
We have valued the Portfolio for accounting purposes since 2009.
We do not consider that this involvement represents a conflict of interest and
the Addressees have confirmed to us that they also consider this to be the
case. You have confirmed that all parties subject to the 'Purpose of
Valuation' have provided their Informed Consent to proceed with this
instruction.
The total fees, including the fee for this assignment, earned by Colliers (or
other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) is less than 5.0% of the total UK revenues for the financial year
ending 31 December 2023.
We confirm that we comply with the requirements of independence and
objectivity under PS2 of the Red Book and have no conflict of interest in
respect of the Company or Properties to the best of our knowledge.
The Properties
The Properties comprise a portfolio of 21 properties (brief details of which
are set out in Appendix 2 to this report), located within towns and cities
throughout the United Kingdom.
The Properties are generally held as investments although there are parts of
some Properties which are vacant and non-income producing.
Assumptions, Extent of Investigations and Sources of Information
We have assumed that the information supplied to us by the Company and their
professional advisers, in respect of all material pertaining to the
Properties, is both complete, accurate and up to date. It follows that we have
made an assumption that details of all matters likely to affect value have
been provided to us. We have not independently verified the information
provided.
We have relied upon this information in preparing this Report and our
Valuation and do not accept responsibility or liability for any errors or
omissions in that information or documentation provided to us, nor for any
consequences arising. Colliers also accepts no responsibility for subsequent
changes in the information that we have not been made aware of.
Furthermore, we have assumed any information supplied can, if necessary, be
verified. Should any of the information provided be found to be inaccurate or
incomplete there could be a variation in value.
We have not inspected the title deeds and apart from those disclosed to us, we
have assumed that all the Properties are free from outgoings and that there
are no unusual, onerous or restrictive covenants in the titles or leases which
would affect the values. Similarly, we have not reviewed leases.
Our Valuation is prepared on the basis that the Properties have good and
marketable titles and are free of any undisclosed onerous burdens, outgoings
or restrictions.
Our General Assumptions and Definitions are contained within Appendix 1
attached to this Report.
Property Inspections & Measurements
All of the Properties were inspected close to the date of their acquisition by
suitably qualified surveyors and continue to be inspected, at least
tri-annually, on a rolling programme. We have not been instructed to reinspect
the Properties as part of this instruction and have therefore made the
assumption that there have been no material changes to the Properties or
immediate surroundings since our last inspection. Where there have been
material changes to the Properties, we have had regard to the information
provided to us by the Company. We have then reflected this in the Valuation.
As instructed, we have not measured any of the Properties and have relied on
areas provided by the Company.
We have assumed that the measurements and areas are correct and have been
assessed and calculated in accordance with professional statement 'RICS
Property Measurement, 2nd edition' (2018)' and with reference to the RICS
guidance note, Code of Measuring Practice, 6th edition (2015).
Tenure
We understand that the Properties are generally of freehold, or heritable,
tenure in respect of the Scottish Properties. We also understand that the
Properties are free from rent charge or any other outgoings and we have
assumed that there are no unusual, onerous or restrictive covenants in the
title which are likely to affect the Property adversely.
A number of the Properties are, however, of leasehold or part leasehold
tenure. In these cases, we have assumed that there are no unduly onerous
covenants within the leases.
We have generally been provided with copies of reports on title or reports on
the head leases, which were prepared on your behalf by your solicitors at the
time of acquisition although for some Properties we have relied upon summary
information provided by your representatives. For the purposes of our
Valuation, we have relied upon the information as to tenure and the like which
is set out within this Report.
Valuation Approach
We have approached our Valuation on the basis of assessing each of the
Properties individually, and not as part of a portfolio, having regard to what
we believe each of the Properties would achieve should it be brought to the
market in isolation at the date of valuation. Our Valuation makes no allowance
for the disposal of the Portfolio in its entirety as a single transaction, or
as a series of smaller portfolio lots. Our Valuation additionally makes no
allowance for any effect on values should all of the Properties be offered to
market at the same time.
Valuation Summary
We are of the opinion that the aggregate Market Value as at the Valuation Date
of the Properties subject to the existing lettings, or otherwise with vacant
possession, was:
£228,445,000
(Two Hundred and Twenty-Eight Million Four Hundred and Forty-Five Thousand
Pounds)
The aforementioned valuation figure represents the aggregate of the individual
valuations of each Property and should not be regarded as the value of all the
Properties in the context of the sale of the single lot.
There are no negative values to report.
The effective date of Company's most recent published annual or consolidated
accounts was 31(st) March 2024. The equivalent figure reported by the
Company as at 31(st) March 2024 was 1.09% higher than the Valuation reported
herein. For the purposes of paragraph 130(vi) of the FCA Technical Note, we
consider that the difference between the Valuation and the equivalent figure
reported in the Company's latest published annual or consolidated accounts for
31(st) March 2024 to be as a result of the occupational changes, capital
expenditure and market movements.
Material changes since the Valuation Date
We hereby confirm that, as at the date of this Valuation Report, there has
been no material change since 30(th) June 2024 in any matter relating to the
Properties which, in our opinion, would have a material effect on the Market
Value of such Properties. For the purposes of Rule 29.5 of the Code, we
confirm that an updated valuation dated the date of this Valuation Report
would not be materially different from that presented in this Valuation Report
as at the Valuation Date.
We are not aware, as a result of our role as Valuers of the Properties of any
matter which would materially affect the Market Value of the Properties which
is not disclosed in this Valuation Report (subject to the assumptions set out
in this Valuation Report) and we are not aware of any matter in relation to
this Valuation Report that we believe should be and has not yet been brought
to the attention of the Addressees.
Reliance, Confidentiality and Disclosure and Consent
This Valuation Report has been prepared for inclusion in the Prospectus at the
Company's request.
Colliers International Property Consultants Limited has given and not
withdrawn its consent to the inclusion of this Valuation Report in the Rule
2.4 Announcement, the Rule 2.7 Announcement, the Scheme Document and in the
Prospectus published by the Company and/or the Offeree in the form and context
in which it is included. Colliers International Property Consultants Limited
has given and not withdrawn its consent to the inclusion of its name and
references to it in the Rule 2.4 Announcement, the Rule 2.7 Announcement, the
Scheme Document and in the Prospectus published by the Company and/or the
Offeree in the form and context in which they appear.
Colliers International Property Consultants Limited consents to the inclusion
of the Valuation and this Valuation Report and any extracts or references
thereto in the Prospectus and the reference to our name in the form and
context in which they are included in the Prospectus.
Colliers International Property Consultants Limited has given and not
withdrawn its consent to the inclusion of this Valuation Report in any further
announcement(s) to be published or made available by the Company or the
Offeree (as applicable) relating to the Transaction and/or the Capital Raising
and Admission, and to the references to this Valuation Report and Colliers
International Property Consultants Limited in the form and context in which
they appear.
This Report and Valuation is addressed to the Addressees for the Purpose and
is for the use of and may be relied upon by the Addressees and shareholders of
the Company and of the Offeree for the Purpose. Save in respect of the
Addressees, shareholders of the Company and of the Offeree: and any
responsibility arising under the Code to any person as and to the extent there
be provided , to the fullest extent permitted by applicable law and regulation
(including, without limitation, the Listing Rules and the Prospectus
Regulation Rules), we do not assume any responsibility and will not accept any
liability to any third party for any loss suffered by any such third party as
a result of, or arising out of, or in accordance with this Report and the
Valuation.
Nothing in this Valuation Report shall exclude or limit our liability in
respect of fraud or for death or personal injury caused by our negligence or
negligence of those for whom we are responsible, or for any other liability to
the extent that such liability may not be excluded or limited as a matter of
applicable law.
Notwithstanding the foregoing, in accordance with the Engagement and for the
purposes of the Code and Prospectus Regulation Rule 5.3.2(R)(2)(f), we are
responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that, to the best
of our knowledge (having taken all reasonable care to ensure this is the case)
the information contained in the Valuation Report is in accordance with the
facts and makes no omissions likely to affect its import.
This Valuation Report complies with, and is prepared in accordance with, and
on the basis of, Rule 29 of the Code and we understand that the publication or
reproduction by the Offeror or the Offeree of this Valuation Report and/or the
information contained herein as required by Rules 26 and 29 of the Code is
necessary, including in the Rule 2.4 Announcement, the Rule 2.7 Announcement,
the Scheme Document and any Code Document.
This Valuation Report complies with, and is prepared in accordance with, (i)
the Prospectus Regulation Rules issued by the FCA, particularly Prospectus
Regulation Rule 5.4.5G; (ii) section III.1. Property Companies within the
guidance set out in the FCA's Primary Market Technical Note 619.1; and (iii)
the requirements of the Listing Rules of the FCA for a property valuation
report.
Except for any responsibility arising under the Code and Prospectus Regulation
Rule 5.3.2R(2)(f) to any person as and to the extent provided under the Code
and Prospectus Regulation Rules, to the fullest extent permitted by law we
do not assume any responsibility and will not accept any liability to any
other person for any loss suffered by any such other person as a result of,
arising out of, or in accordance with the Valuation Report or our statement
set out above required by and given solely for the purposes of complying with
the Code and Annex 3, item 1.2 of the UK version of Commission Delegated
Regulation (EU) 2019/980.
For the avoidance of doubt, this Report and Valuation is provided by Colliers
International Property Consultants Limited and no partner, member or employee
assumes any personal responsibility for it nor shall owe a duty of care in
respect of it.
Yours faithfully,
R D Barrett BSc MRICS S Duncan FRICS MRTPI
Director Director
RICS Registered Valuer RICS Registered Valuer
For Colliers International Property Consultants Limited For Colliers International Property Consultants Limited
Appendix 1:
General Assumptions and Definitions
Unless otherwise instructed, our valuations are carried out in accordance with
the following assumptions, conditions and definitions. These form an
integral part of our appointment.
Our Report and Valuation is provided in accordance with the current edition of
the RICS Valuation - Global Standards (Incorporating the IVSC International
Valuation Standards) prepared by the Royal Institution of Chartered Surveyors
(the "Red Book"), and with any agreed instructions. Any opinions of value
are valid only at the valuation date and may not be achievable in the event of
a future disposal or default, when both market conditions and the sale
circumstances may be different.
Within the Report and Valuation, we make assumptions in relation to facts,
conditions or situations that form part of the valuation We assume that all
information provided by the addressee of the report, any borrower or third
party (as appropriate) in respect of the property is complete and correct.
We assume that details of all matters relevant to value, such as prospective
lettings, rent reviews, legislation and planning decisions, have been made
available to us, and that such information is up to date. In the event that
any of these assumptions prove to be incorrect then we reserve the right to
review our opinion(s) of value.
Valuation Definitions:
Market Value is defined in IVS 104 paragraph 30.1 as:
'The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion'.
The interpretative commentary on Market Value, within the International
Valuation Standards (IVS), has been applied.
Valuations produced for capital gains tax, inheritance tax and Stamp Duty Land
Tax / Land and Buildings Transaction Tax purposes will be based on the
statutory definitions, which are written in similar terms and broadly define
Market Value as:
'The price which the property might reasonably be expected to fetch if sold in
the open market at that time, but that price must not be assumed to be reduced
on the grounds that the whole property is to be placed on the market at one
and the same time.'
Market Rent is defined in IVS 104 paragraph 40.1 as:
'The estimated amount for which an interest in real property should be leased
on the valuation date between a willing lessor and a willing lessee on
appropriate lease terms in an arm's length transaction, after proper marketing
and where the parties had each acted knowledgeably, prudently and without
compulsion.'
The appropriate lease terms will normally reflect current practice in the
market in which the property is situated, although for certain purposes
unusual terms may need to be stipulated. Unless stated otherwise within the
report, our valuations have been based upon the assumption that the rent is to
be assessed upon the premises as existing at the date of our inspection.
Investment Value or 'Worth', is defined in IVS 104 paragraph 60.1 as:
'the value of an asset to a particular owner or prospective owner for
individual investment or operational objectives.'.
This is an entity-specific basis of value and reflects the circumstances and
financial objectives of the entity for which the valuation is being
produced. Investment value reflects the benefits received by an entity from
holding the asset and does not necessarily involve a hypothetical exchange.
Fair Value is defined according to one of the definitions below, as applicable
to the instructions.
Fair Value - International Accounting Standards Board (IASB) in IFRS 13.
'The price that would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at the
measurement date'.
Fair Value - UK Generally Accepted Accounting Principles (UK GAAP) adopts the
FRS 102 definition:
"The amount for which an asset could be exchanged, a liability settled, or an
equity instrument granted could be exchanged, between knowledgeable, willing
parties in an arm's length transaction."
Existing Use Value is defined in UKVS 1.3 of the Red Book:
'The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction, after proper marketing wherein the parties had acted
knowledgeably, prudently and without compulsion, assuming that the buyer is
granted vacant possession of all parts of the asset required by the business
and disregarding potential alternative uses and any other characteristics of
the asset that would cause its Market Value to differ from that needed to
replace the remaining service potential at least cost.'
Special Assumptions
Where we are instructed to undertake valuations subject to a Special
Assumption, these usually require certain assumptions to be made about a
potential alternative use or status of the property. This is a hypothetical
scenario that we consider realistic, relevant and valid as at the valuation
date, but which may not necessarily be deliverable at a future date.
Reinstatement / Replacement Cost Assessment And Insurance
If we provide a reinstatement cost assessment, we do not undertake a detailed
cost appraisal and the figure is provided for guidance purposes only. It is
not a valuation in accordance with the Red Book and is provided without
liability. It must not be relied upon as the basis from which to obtain
building insurance.
In arriving at our valuation we assume that the building is capable of being
insured by reputable insurers at reasonable market rates. If, for any
reason, insurance would be difficult to obtain or would be subject to an
abnormally high premium, it may have an effect on costs.
Purchase and Sale Costs, SDLT, LBTT and Taxation
No allowance is made for legal fees or any other costs or expenses which would
be incurred on the sale of the property. However, where appropriate, and in
accordance with market practice for the asset type, we make deductions to
reflect purchasers' acquisition costs. Trade-related properties are usually
valued without deducting the costs of purchase. Where appropriate,
purchasers' costs are calculated based on professional fees inclusive of VAT,
together with the appropriate level of Stamp Duty Land Tax (SDLT) / Land and
Buildings Transaction Tax (LBTT) / Land Transaction Tax (LTT).
Whilst we have regard to the general effects of taxation on market value, we
do not take into account any liability for tax that may arise on a disposal,
whether actual or notional, neither do we make any deduction for Capital Gains
Tax, VAT or any other tax. We make no allowance for receipt or repayment of
any grants or other funding.
Plans, Floor Areas and Measurements
Where a site plan is provided, this is for indicative purposes only and should
not be relied upon. Site areas are obtained from third party sources,
including electronic databases, and we are unable to warrant their accuracy.
Our assumptions as to site boundaries / demise should be verified by your
legal advisers. If any questions of doubt arise the matter should be raised
with us so that we may review our valuation.
We obtain floor areas in accordance with our instructions. This may comprise
one or more of the following approaches (i) we measure the floor areas during
the property inspection (ii) we calculate floor areas from plans provided to
us, supported by check measurements on site where possible, (iii) we rely upon
floor areas provided. Under approaches (ii) and (iii), we wholly rely upon
the information provided, and assume that the areas have been calculated in
accordance with market standards. We are unable to provide any warranties as
to accuracy.
Measurement is in accordance with the current edition of RICS Property
Measurement. If we are instructed not to adopt International Property
Measurement Standards (IPMS), measurements are provided in accordance with the
latest version of the Code of Measuring Practice. We adopt the appropriate
floor area basis for our valuation analysis to reflect the analysis of floor
areas in the comparable transactions. Where the basis of analysis of a
comparable is uncertain, we adopt a default assumption for that asset type.
Although every reasonable care is taken to ensure the accuracy of the surveys
there may be occasions when due to tenant's fittings, or due to restricted
access, professional estimations are required. We recommend that where
possible, we are provided with scaled floor plans in order to cross-reference
the measurements. In the event that a specialist measuring exercise is
undertaken for the property, we recommend that a copy is forwarded to us in
order that we may comment on whether there may be an impact on the reported
value.
Floor areas set out in our report are provided for the purpose described in
the Report and Valuation and are not to be used or relied upon for any other
purpose.
Condition, Structure and Services, Harmful / Deleterious Materials, Health
& Safety Legislation and EPCs
Our Report and Valuation takes account of the general condition of the
property as observed from the valuation inspection, and is subject to
access. Where we have noticed items of disrepair during the course of our
inspections, they are reflected in our valuations, unless otherwise stated.
We do not undertake any form of technical, building or deleterious material
survey and it is a condition of our appointment that we will in no way review,
or give warranties as to, the condition of the structure, foundations, soil
and services. Unless we are supplied with evidence to the contrary, we
assume that the property is fully in compliance with building regulations and
is fully insurable. We assume it is free from any rot, infestation, adverse
toxic chemical treatments, and structural or design defects. We assume that
none of the materials commonly considered deleterious or harmful are included
within the property, such as, inter alia, asbestos, high alumina cement
concrete, reinforced autoclaved aerated concrete (RAAC), calcium chloride as a
drying agent, wood wool slabs as permanent shuttering, aluminium composite
cladding material, polystyrene and polyurethane cladding insulation.
In the event that asbestos is identified in a property, we do not carry out an
asbestos inspection, nor are we able to pass comment on the adequacy of any
asbestos registers or management plans. Where relevant, we assume that the
property is being managed in full compliance with the Control of Asbestos
Regulations 2012 and relevant HSE regulations, and that there is no
requirement for immediate expenditure, nor any risk to health.
We do not test any services, drainage or service installations. We assume
that all services, including gas, water, electricity and sewerage, are
provided and are functioning satisfactorily.
We assume that the property has an economic life span similar to comparable
properties in the market, subject to regular maintenance and repairs in
accordance with appropriate asset management strategies.
We comment on the findings of Energy Performance Certificates (EPCs) and
Display Energy Certificates (DECs) if they are made available to us but may be
unable to quantify any impact on value. If we are not provided with an EPC,
we assume that if one was available, its rating would not have had a
detrimental impact upon our opinion value or marketability.
Our valuations do not take account of any rights, obligations or liabilities,
whether prospective or accrued, under the Defective Premises Act, 1972.
Unless advised to the contrary, we assume that the properties comply with, and
will continue to comply with, the current Health & Safety and Disability
legislation.
We do not test any alarms or installations and assume that the property
complies with, and will continue to comply with, fire regulations and the
Smoke and Carbon Monoxide Alarm (England) Regulations 2015 legislation.
Where a specialist condition or structural survey is provided to us, we
reflect the contents of the report in our valuation to the extent that we are
able to as valuation surveyors, and our assumptions should be verified by the
originating consultant. Should any issues subsequently be identified, we
reserve the right to review our opinion of value.
Ground Conditions, Environmental Matters, Constraints and Flooding
We are not chartered environmental surveyors and we will not provide a formal
environmental assessment. Our investigations are therefore limited to
observations of fact, obtained from third party sources, such as local
authorities, the Environment Agency and professional reports that may be
commissioned for the valuation.
We do not carry out any soil, geological or other tests or surveys in order to
ascertain the site conditions or other environmental conditions of the
property. Unless stated to the contrary within the report, our valuation
assumes that there are no unusual features that may be harmful to people or
property, or that would inhibit the actual or assumed use or development of
the property. This includes, inter alia: ground conditions and load bearing
qualities, subterranean structures or services, contamination, pollutants,
mining activity, sink holes, archaeological remains, radon gas,
electromagnetic fields and power lines, invasive plants and protected species.
We do not undertake any investigations into flooding, other than is available
from public sources or professional reports provided to us. Our findings are
outlined in the report for information only, without reliance or warranty.
We assume in our valuation that appropriate insurance is in place and may be
renewed to any owner of the property by reputable insurers at reasonable
market rates. If, for any reason, insurance would be difficult to obtain or
would be subject to an abnormally high premium, it may have an effect on
value.
Should our enquiries or any reports indicate the existence of environmental
issues or other matters as described above, we expect them to contain
appropriate actions and costings to address the issue. We rely on this
information and use it as an assumption in our valuation. If such
information is not available, we may not be able to provide an opinion of
value.
We assume that the information and opinions we are given in order to prepare
our valuation are complete and correct and that further investigations would
not reveal more information sufficient to affect value. However, a purchaser
in the market may undertake further investigations, and if these were
unexpectedly to reveal issues, then this might reduce the values reported.
We recommend that appropriately qualified and experienced specialists are
instructed to review our report and revert to us if our assumptions are
incorrect.
Plant And Machinery, Fixtures and Fittings
We disregard the value of all process related plant, machinery, fixtures and
fittings, and those items which are in the nature of occupiers' trade fittings
and equipment. We have regard to landlords' fixtures such as lifts,
escalators, central heating and air conditioning forming an integral part of
the buildings.
Where properties are valued as an operational entity and includes the fixtures
and fittings, it is assumed that these are not subject to any hire purchase or
lease agreements or any other claim on title.
No equipment or fixtures and fittings are tested in respect of Electrical
Equipment Regulations and Gas Safety Regulations and we assume that where
appropriate all such equipment meets the necessary legislation. Unless
otherwise specifically mentioned the valuation excludes any value attributable
to plant and machinery.
Operational Entities
Where the properties are valued as an operational entity and reference is made
to the trading history or trading potential of the property, we place reliance
on information supplied to us. Should this information subsequently prove to
be inaccurate or unreliable, the valuations reported could be adversely
affected. Our valuations do not make any allowance for goodwill.
Title, Tenure, Occupational Agreements and Covenants
Unless otherwise stated, we do not inspect the Land Registry records, title
deeds, leases or related legal documents and, unless otherwise disclosed to
us, we assume good and marketable title that is free from onerous or
restrictive covenants, rights of way and easements, and any other encumbrances
or outgoings that may affect value. We disregard any mortgages (including
regulated mortgages), debentures or other charges to which the property may be
subject.
We assume that any ground rents, service charges other contributions are fair
and proportionate, and are not subject to onerous increases or reviews.
Where we have not been supplied with leases, unless we have been advised to
the contrary, we assume that all the leases are on a full repairing and
insuring basis and that all rents are reviewed in an upwards direction only,
at the intervals notified to us, to market rent. We assume that no questions
of doubt arise as to the interpretation of the provisions within the leases
giving effect to the rent reviews. We assume that wherever rent reviews or
lease renewals are pending, all notices have been served validly within the
appropriate time limits, and they will be settled according to the assumptions
we set out within the reports.
Unless informed otherwise, we assume that all rents and other payments payable
by virtue of the leases have been paid to date and there are no arrears of
rent, service charge or other breaches in the obligations of occupation.
In the case of property that is let, our opinion of value is based on our
assessment of the investment market's perception of the covenant strength of
the occupier(s). This is arrived at in our capacity as valuation surveyors
on the basis of information that is publicly available. We are not accountants
or credit experts and we do not undertake a detailed investigation into the
financial status of the tenants. Our valuations reflect the type of tenants
actually in occupation or responsible for meeting lease commitments, or likely
to be in occupation, and the market's general perception of their
creditworthiness. We provide no warranties as to covenant strength and
recommend that you make your own detailed enquiries if your conclusions differ
from our own.
Where we are provided with a report on title and/or occupational agreement, we
form our opinion of value reflecting our interpretation of that title. Your
legal advisers should review our understanding of the title and confirm that
this is correct.
Planning, Licensing, Rating and Statutory Enquiries
We undertake online planning enquiries to the extent that we consider
reasonable and appropriate to the valuation. We do not make formal verbal or
written enquiries to local authorities. If a professional planning report is
provided to us, we will take the findings into account in our valuation but
will not be accountable for the advice provided within it, nor any errors of
interpretation or fact within the third party report.
We assume that the property is constructed, used and occupied in full
compliance with the relevant planning and building regulation approvals and
that there are no outstanding notices, conditions, breaches, contraventions,
non-compliance, appeals, challenges or judicial review. We assume that all
consents, licenses and permissions are in place, that there are no outstanding
works or conditions required by lessors or statutory, local or other competent
authorities, and that no adverse planning conditions or restrictions apply.
If we are instructed to value property on the Special Assumption of having the
benefit of a defined planning permission or license, we assume that it will
not be appealed or challenged at any point prior to, or following,
implementation.
Our investigations are limited to identifying material planning applications
on the property and observable constraints. We seek to identify any
proposals in the immediate vicinity that may have an impact on the property,
such as highway proposals, comprehensive development schemes and other
planning matters.
We seek to obtain rateable values and council tax banding from the statutory
databases, where available. The 2023 rating revaluation has resulted in some
increases in rateable values in specific sectors. This may have an impact on
the marketability and value of a property, and on vacancy rates or landlord
non recoverable costs. However, unless there is evidence to the contrary, we
will make the express assumption that any changes are affordable to occupiers,
or will be subject to appropriate transitional relief. We do not reflect the
impact of any rating appeals in our valuations unless they are formally
concluded.
Given that statutory information is obtained from third party sources, we are
unable to provide any warranty or reliance as to its accuracy. Your legal
advisers should verify our assumptions and revert to us if required.
Valuations Assuming Development, Refurbishment or Repositioning
Unless specifically instructed to the contrary, where we are provided with
development costs and construction schedules by the addressee, a borrower or
an independent quantity surveyor, we rely on this information as an assumption
in arriving at our opinion of value. It forms an assumption within our
valuation and we accept no liability if the actual costs or programme differ
from those assumed at the valuation date.
We are not quantity surveyors and provide no reliance as to construction costs
or timescale. Irrespective of the source of this information, a professional
quantity surveyor should review our assumptions and revert to us if there are
any issues of doubt, so that we may review our opinion of value.
We additionally assume that a hypothetical market purchaser will have the
necessary resources, skills and experience to deliver the proposed
development. It is not within our scope to assess the credentials of any
actual purchaser, owner or developer of the property that is subject to our
valuation. We accept no liability for any circumstances where a development
or refurbishment does not achieve our concluded values.
If a property is in the course of development, our valuation assumes that the
interest will be readily assignable to a market purchaser with all contractor
and professional team warranties in place. Where an opinion of the completed
development value is required, we assume that all works are completed in
accordance with appropriate statutory and industry standards and are
institutionally acceptable.
Alternative Investment Funds
In the event that our appointment is from an entity to which the European
Parliament and Council Directive 2011/61/EU ('the AIFMD'), which relates to
Alternative Investment Fund Managers ('AIFM'), applies, our instructions are
solely limited to providing recommendations on the value of particular
property assets (subject to the assumptions set out in our valuation report)
and we are therefore not determining the net asset value of either the Fund or
the individual properties within the Fund. Accordingly, we are not acting as
an 'external valuer' (as defined under the AIFMD) but are providing our
service in the capacity of a 'valuation advisor' to the AIFM.
Interpretation and Comprehension of The Report and Valuation
Real estate is a complex asset class that carries risk. Any addressee to
whom we have permitted reliance on our Report and Valuation should have
sufficient understanding to fully review and comprehend its contents and
conclusions. We strongly recommend that any queries are raised with us
within a reasonable period of receiving our Report and Valuation, so that we
may satisfactorily address them.
Appendix 2:
Property Address
4 London Mall, 1 Station Mall, Basingstoke
Bexleyheath Shopping Centre, Bexleyheath
Broadway Square, Bexleyheath
Sovereign Centre, Boscombe
The Promenades, Bridlington
Capitol Shopping Centre, Cardiff
Merlin's Walk, Carmarthen
14/17 Frenchgate, Doncaster
Freshney Place Shopping Centre, Grimsby
39 The Broadwalk, Harlow
Unit 47, 5 Trinity Square, Hereford
Burns Mall, Kilmarnock
Newkirkgate Shopping Centre, Leith
The Deeping Centre, Market Deeping
The Hill Street Centre, Middlesbrough
Gloucester Green, Oxford
The Paisley Centre, Paisley
The Hildreds Shopping Centre, Skegness
Three Horseshoes Shopping Centre, Warminster
The Horsefair Shopping Centre, Wisbech
Newlands Shopping Centre, Witham
Part C - Knight Frank Valuation Report (Capital & Regional Portfolio)
Valuation Report
NewRiver REIT plc
Valuation date: 30 June 2024
Important Notice to all readers of this report
Unless you are the Client named within this report, or have been explicitly
identified by us as a party to whom we owe a responsibility, a duty of care
and who is entitled to rely on this report, Knight Frank LLP does not owe or
assume any duty of care to you in respect of the contents of this report and
you are not entitled to rely upon it.
NewRiver REIT plc
89 Whitfield Street
London
W1T 4DE (hereinafter referred to as the "Client" and the "Offeror")
Jefferies International Limited (acting as lead financial adviser and joint
corporate broker to the Client)
100 Bishopsgate
London
EC2N 4JL (hereinafter referred to as the "Offeror Financial Adviser")
Panmure Liberum Limited (acting as sole sponsor and joint corporate broker to
the Client)
Ropemaker Place
Level 12
25 Ropemaker Street
London
EC2Y 9LY (hereinafter referred to as the "Offeror Sponsor")
Kinmont Limited (acting as joint financial adviser to the Client)
5 Clifford Street
London
W1S 2LG
Shore Capital Stockbrokers Limited (acting as joint corporate broker to the
Client)
Cassini House
57 St James's Street Click or tap here to enter text.
London
SW1A 1LD
(together, hereinafter referred to as the "Offeror Addressees")
Capital & Regional plc
Strand Bridge House
138-142 Strand
London
WC2R 1HH (hereinafter referred to the "Offeree")
Numis Securities Limited (trading as Deutsche Numis) (acting as joint
financial adviser and joint corporate broker to Offeree)
45 Gresham Street
London
EC2V 7BF
Stifel Nicolaus Europe Limited (acting as joint financial adviser and joint
corporate broker to Offeree)
4(th) Floor
150 Cheapside
London
EC2V 6ET
(together, hereinafter referred to as the "Offeree Joint Financial Advisers")
(each an "Addressee" and together the "Addressees")
45 Gresham Street
London
EC2V 7BF
Stifel Nicolaus Europe Limited (acting as joint financial adviser and joint
corporate broker to Offeree)
4(th) Floor
150 Cheapside
London
EC2V 6ET
(together, hereinafter referred to as the "Offeree Joint Financial Advisers")
(each an "Addressee" and together the "Addressees")
Click or tap here to enter text.
Our Ref: 1148765
Date of issue: 18 September 2024
Dear Sir/Madam
Valuation Report in respect of the properties of Capital & Regional plc as
at 30 June 2024 for inclusion in a Rule 2.4 Announcement, Rule 2.7
Announcement, Scheme Document and Prospectus ("Valuation Report")
Further to your instructions, we are pleased to provide our Valuation Report
in respect of the freehold, heritable or leasehold interests in the properties
("Properties") set out in Appendix 1 (Schedule of Properties) below in
connection with inclusion in a Rule 2.4 Announcement, Rule 2.7 Announcement,
Scheme Document to be published by the Offeree and a Prospectus to be
published by the Offeror, in connection with a possible acquisition of the
entire issued, and to be issued, share capital of the Offeree by the Offeror
(the "Transaction").
Knight Frank
55 Baker Street, London, W1U 8AN
+44 20 7629 8171
knightfrank.co.uk
Knight Frank is the trading name of Knight Frank LLP. Knight Frank LLP is a
limited liability partnership registered in England and Wales with registered
number OC305934. Our
registered office is at 55 Baker Street, London W1U 8AN where you may look at
alist of members' names. If we use the term 'partner' when referring to one
of our representatives, that person will either be a member, employee, worker
or consultant of Knight Frank LLP and not a partner in a partnership.
Signed for and on behalf of Knight Frank LLP
Signature.
Ben Nicholson MRICS
RICS Registered Valuer
Partner, Valuation & Advisory
ben.nicholson@knightfrank.com
T +44 20 7590 2468
M +44 7792 822 330
1. About this report
Engagement of Knight Frank LLP
1.1 This Valuation Report sets out our valuation, as at 30
June 2024 ("Valuation Date"), of the Properties ("Valuation"). This Valuation
Report has been prepared in accordance with our Terms of Engagement letter
dated 13 September 2024 addressed to the Addressees, and our General Terms of
Business for Valuation Services (together the "Agreement").
Client
1.2 We have been instructed to prepare this Valuation Report
by NewRiver REIT plc. However as set out above, this Valuation Report has also
been addressed to other Addressees.
Valuation standards
1.3 The Valuation has been undertaken in accordance with and
complies with: (a) the current editions of RICS Valuation - Global Standards,
which incorporate the International Valuation Standards, and the RICS UK
National Supplement. References to the "Red Book" refer to either or both of
these documents, as applicable; (b) Rule 29 of the City Code on Takeovers and
Mergers (the "Code") as issued by the UK Panel on Takeovers and Mergers; (c)
paragraphs 128-130 of the Financial Conduct Authority ("FCA") Primary Market
Technical Note 619.1 (the "FCA Technical Note"); and (d) Rules 5.4.5 and 5.4.6
of the UK Prospectus Regulation Rules published by the FCA. This Valuation
Report is an unqualified valuation report prepared in accordance with the
requirements of Rule 29 of the Code by a valuer who has had access to
sufficient information to prepare it.
1.4 The Properties have been valued by a valuer who is
qualified for the purposes of the Valuation in accordance with Rule 29 of the
Code. For the purposes of this Valuation Report, "UK Prospectus Regulation
Rules" shall mean the prospectus regulation rules made by the FCA for the
purposes of part 6 of the Financial Services and Markets Act 2000, as amended.
Status and experience of valuer
Valuer and expertise
1.5 The valuer, on behalf of Knight Frank LLP, with the responsibility
for this Valuation Report is Ben Nicholson MRICS, RICS Registered Valuer
("Responsible Valuer"). Parts of the Valuation have been undertaken by
additional valuers as listed on our file.
1.6 We confirm that the Responsible Valuer and any
additional valuers who value the Properties meet the requirements of the Red
Book and Rule 29.3(a)(iii) of the Code in having sufficient current knowledge
of the particular market and the skills and understanding to undertake the
Valuation and prepare this Valuation Report competently and are appropriately
qualified for the purposes of the Valuation as required by Rule 29.3(a)(ii) of
the Code and are independent of the parties to the offer as required by Rule
29.3(a)(i) of the Code.
1.7 We confirm that we are not aware of any reason why we would
not satisfy the requirements of Rule 29.3(a)(i) of the Code.
Conflicts of Interest: Declaration and Disclosures
1.8 We confirm that the Responsible Valuer and additional
valuers meet the requirements of the Red Book, having sufficient current
knowledge of the particular market and the skills and understanding to
undertake the Valuation competently.
1.9 We confirm that we have no material interest in the
Client and we are acting as an External Valuer in valuing the Properties for
the Purpose (as that term is defined below).
1.10 This Valuation Report has been vetted as part of Knight
Frank LLP's quality assurance procedures.
1.11 We recognise and support the RICS Rules of Conduct and have
procedures for identifying conflicts of interest.
Independence
1.12 Knight Frank LLP currently values a number of freehold,
heritable and/or leasehold interests of the Client (which for the avoidance of
doubt does not include the Properties), for financial reporting purposes, on
behalf of the Client. The total fees for this assignment, earned by Knight
Frank LLP (or other companies forming part of the same group of companies
within the UK) from the Client (or other companies within the UK) is less than
5.0% of the total UK revenues. It is not anticipated that there will be a
material increase in the proportion of the fees payable, or likely to be
payable, by the Client.
1.13 Other than these valuation services, Knight Frank LLP has
no current material involvement with the assets being valued and we confirm
that we can report without any material conflict.
Use of this Valuation
Purpose of valuation
1.14 The Valuation and this Valuation Report are each provided
solely for the purpose of:
(A) inclusion in an announcement proposed to be made by the Offeror
pursuant to Rule 2.4 of the Code in connection with the Transaction (the "Rule
2.4 Announcement");
(B) inclusion in an announcement proposed to be made by the Offeror
and the Offeree pursuant to Rule 2.7 of the Code in connection with the
Transaction (the "Rule 2.7 Announcement");
(C) inclusion in a scheme circular to be published by the Offeree
in connection with the Transaction (the "Scheme Document");
(D) inclusion in a prospectus to be published by the Offeror in
connection with the Transaction and the issue and allotment of new shares in
the capital of the Offeror pursuant, amongst other things, to the terms of the
Transaction (the "Prospectus");
(E) inclusion and/or reference to it in any other announcements,
documents and/or supplementary documents required to be released by the
Offeror and/or the Offeree pursuant to the Code and which directly relate to
the Transaction (each a "Code Document"); and
(F) publication on the Offeror's website and the Offeree's website
in accordance with the requirements of Rule 26.3 of the Code and the UK
Prospectus Regulation Rules,
(together, the "Purpose").
Reliance
1.15 This Valuation Report has been prepared for the Addressees
only and is for the use of, and may be relied upon by, the Addressees for the
Purpose. Notwithstanding the General Terms, we acknowledge that this Valuation
Report will also be for the use of the shareholders of the Offeror and the
Offeree for the Purpose set out above.
1.16 Save for: (a) the Addressees; and (b) any responsibility
arising under the Code and/or the UK Prospectus Regulation Rules to any person
as and to the extent there provided, in accordance with Clauses 3 & 4 of
the General Terms and to the fullest extent permitted by law, we do not assume
any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or
in accordance with this Valuation Report or our statement, required by and
given solely for the purposes of complying with the UK Prospectus Regulation
Rules and Rule 29 of the Code.
Disclosure & publication
1.17 The Valuation has been prepared for the Client and in
accordance with the Agreement which governs its purpose and use. As stated in
the Agreement, this Valuation Report is confidential to the Addressees and
must not be disclosed to any person other than for the Purpose without our
express written consent. Other than for the Purpose, neither the whole, nor
any part of this Valuation Report nor any reference thereto may be included in
any prospectus, listing particulars, published document, circular or statement
nor published in any way without our prior written approval of the form or
context in which it may appear.
1.18 Notwithstanding paragraph 1.17 above, this Valuation
Report may be disclosed as set out below:
Subject to the terms and conditions (but disregarding for these purposes
clauses 4.3 to 4.6 (inclusive) of the General Terms) of the Agreement and our
approval of the form and context thereof, we hereby confirm that we will
authorise and consent to the disclosure of this Valuation Report:
i. as may be required by any applicable court of competent
jurisdiction or other competent judicial or governmental body or any
applicable law or regulation or pursuant to government action, regulatory
requirement or request;
ii. to each Addressee's affiliates and each Addressee's
affiliates' respective directors, officers, employees, agents, professional
advisers, insurers, auditors and bankers that need to see the Valuation in
connection with the Purpose;
iii. in the case of the Offeror Addressees, in seeking to
establish a defence or otherwise in connection with any actual or threatened
legal or regulatory proceedings or investigation relating to the matters set
out in this Letter or claims that may be brought against them arising from
their roles as financial adviser, sponsor and/or joint corporate broker (as
applicable) to the Offeror;
iv. in the case of the Offeree Joint Financial Advisers, in
seeking to establish a defence or otherwise in connection with any actual or
threatened legal or regulatory proceedings or investigation relating to the
matters set out in this Letter or claims that may be brought against them
arising from their roles as joint financial adviser and/or joint corporate
broker (as applicable) to the Offeree;
v. in investor presentations and other investor education
materials prepared in connection with the Transaction, and in any private
discussions with Investors or other third parties in connection with the
Transaction;
vi. for the Purpose; and/or
vii. to any Addressee's insurers in respect of any claim or
potential claim relating to the Transaction, but in each case only on the
basis that: (a) such disclosure is made to inform the recipient that Knight
Frank have no duty of care and therefore shall have no liability to the
recipient in respect of the relevant document; and (b) such recipient agrees
not to provide a copy of the document to any other person without the prior
written consent of Knight Frank.
1.19 It is a condition of such disclosure that each party in
receipt of this Valuation Report that is not an Addressee agrees and
acknowledges that this Valuation Report cannot be relied upon by them, and we
do not accept any responsibility, duty of care or liability to them, whether
in contract, tort (including negligence), misrepresentation or otherwise in
respect of the Valuation and the information it contains. For the avoidance
of doubt, nothing in the preceding sentence shall affect our responsibility,
for the purposes of Rule 5.3.2R(2)(f) of the UK Prospectus Regulation Rules,
or under paragraphs 1.15 and 1.16 of this Valuation Report for the information
contained in this Valuation Report.
1.20 This Valuation Report complies with Rule 29 of the Code and
we understand that the publication or reproduction by the Offeror or Offeree
of this Valuation Report and/or the information contained herein as required
by Rules 26 and 29 of the Code is necessary, including in the Rule 2.4
Announcement, the Rule 2.7 Announcement, the Scheme Document and any Code
Document.
1.21 We confirm that this Valuation Report complies with Rules
5.4.5G and 5.4.6G of the UK Prospectus Regulation Rules and paragraphs 128 to
130 of the FCA Technical Note.
1.22 We confirm that the information contained in the Prospectus
which is extracted from this Valuation Report is accurate, balanced and
complete and is not misleading or inconsistent with this Valuation Report as
prepared by us and has been properly extracted, derived or computed from this
Valuation Report.
1.23 The Addressees agree and acknowledge that we shall have no
liability for any error, omission or inaccuracy in this Valuation Report to
the extent resulting from our reliance on information provided by or on behalf
of the Client unless otherwise stated. Notwithstanding the above, we highlight
the restricted nature of this instruction, in accordance with the Red Book; as
a result the reliance that can be placed on the Valuation is limited.
Verification
1.24 We recommend that before any financial transaction is
entered into based upon the Valuation, you obtain verification of any
third-party information contained within this Valuation Report.
1.25 We would advise you that whilst we have valued the
Properties reflecting current market conditions, there are certain risks which
may be, or may become, uninsurable. Before undertaking any financial
transaction based upon this Valuation, you should satisfy yourselves as to the
current insurance cover and the risks that may be involved should an uninsured
loss occur.
Limitations on liability
1.26 Knight Frank LLP's total liability for any direct loss or
damage (whether caused by negligence or breach of contract or otherwise)
arising out of or in connection with this Valuation is limited in accordance
with the terms of the Agreement. Knight Frank LLP accepts no liability for any
indirect or consequential loss or for loss of profits.
1.27 We confirm that we hold adequate and appropriate PII cover
for this instruction.
1.28 No claim arising out of or in connection with this
Valuation may be brought against any member, employee, partner or consultant
of Knight Frank LLP. Those individuals will not have a personal duty of care
to any party and any claim for losses must be brought against Knight Frank
LLP.
1.29 Nothing in this Valuation shall exclude or limit our
liability in respect of fraud or for death or personal injury caused by our
negligence or for any other liability to the extent that such liability may
not be excluded or limited as a matter of law or regulation.
Scope of work
General Scope of Valuation Work
1.30 The Valuation has been undertaken, and this Valuation
Report prepared, in accordance with the General Scope of Valuation Work
appended to this Valuation Report at Appendix 2.
Information to be relied upon
1.31 We have relied upon the information previously provided to
us by the Offeror, or by third parties in respect of the 30 June 2024
Valuation and will assume it to be correct for the purposes of the Valuation
unless you inform us otherwise, subject only to any valuation that we have
agreed to undertake.
1.32 Where we express an opinion in respect of (or which depends
upon) legal issues, any such opinion must be verified by your legal advisors
before any Valuation can be relied upon.
1.33 We are instructed to rely on floor areas and tenancy
information provided by the Client. We have not read lease agreements nor
verified accordance between tenancy schedule and lease terms.
1.34 Knight Frank LLP cannot be held liable as regards the legal
description of the Properties, its use, non-compliance with statutory
requirements, technological and natural risks, the areas taken into account,
the existence of concealed defects, presence of asbestos, adverse ground
condition, presence of soil contamination, presence of insects, noxious
animals or plants, rot, or deleterious materials, etc. This Valuation Report
comments on the above on the basis of Technical or Environmental reports, if
provided.
Inspections
1.35 In undertaking the Valuation we have carried out an
inspection of the Properties internally and externally. Our inspections of all
the Properties have been undertaken within the last six months.
Information Provided
1.36 In this Valuation Report we have been provided with
information by the Client, its advisors and other third parties. We have
relied upon this information as being materially correct in all aspects.
1.37 In the absence of any documents or information provided, we
have had to rely solely upon our own enquiries as outlined in this Valuation
Report.
1.38 We have assumed there to be good and marketable titles to
the Properties. We have made oral enquiries with the Client where appropriate
and have taken account, insofar as we are aware, of unusual outgoings,
planning proposals and onerous restrictions or local authority intentions
which affect the Properties. However, this information has been provided to us
on the basis that it should not be relied upon.
1.39 We have been supplied with details of tenure and tenancies
and have valued on the basis that there are no undisclosed matters which would
affect our valuation.
1.40 We have not undertaken any building surveys or
environmental audits and are therefore unable to report that the Properties
are free of any structural fault, rot, infestation or defects of any other
nature, including inherent weaknesses due to the use in construction of
materials now suspect. No tests were carried out on any of the technical
services. However, we have reflected any apparent wants of repair in our
opinion of value as appropriate.
1.41 The Properties have been valued individually, not as part
of a portfolio.
Assumptions
1.42 We have assumed, except where we have been informed to the
contrary, that there are no adverse ground or soil conditions or environmental
contaminations which would affect the present or future use of the Properties
and that the load bearing qualities of the site of each property are
sufficient to support the buildings constructed or to be constructed thereon.
1.43 In respect of the long leasehold interest held in
17&Central, 42 Selborne Rd, Walthamstow, London E17 7JR, we understand
that the developer of the residential premises over part of the scheme, will
be handing back 6 retail units with ancillary accommodation at first floor
level to the Offeree in October 2024. We are making the assumption that all
appropriate works will be completed by the developer and that the units will
be handed back in shell condition in readiness for letting.
1.44 With regard to The Mall, 159 High Rd, Wood Green, London
N22 6YQ we are aware that the Offeree will be responsible for the replacement
to the external cladding panels to the Travelodge hotel. We have been provided
with an estimate including contingency and fees to cover such works and are
making the assumption that this capital provision is sufficient to complete
the replacement of the panels. We have made a capital deduction in the
valuation to cover the cost of the rectification works. We are further
assuming that the tenant will be able to continue to operate while such works
are undertaken.
1.45 Since 30 June 2024 we are aware that Cine-UK Limited which
occupy premises at The Mall, 159 High Rd, Wood Green, London N22 6YQ, have
issued a letter setting out re-structuring plans, which will be considered by
the Court at the convening hearing. The full implications of the proposed
restructure were unknown at the valuation date and our valuation currently
reflects the uncertainty of the situation.
1.46 For The Exchange, High Rd, Ilford IG1 1RS, we understand
that there are key lettings with agreed terms requiring capital expenditure.
On Level 1 terms have been agreed to let 30,000 sq ft and Level 3, 14,000 sq
ft. We are making the assumption that the capital provisions which have been
deducted from the valuation are sufficient to complete the lettings.
2. Valuation
Methodology
2.1 The Valuation has been undertaken using appropriate
valuation methodology and our professional judgement.
Comparative method
2.2 In undertaking the Valuation, we have made our
assessment on the basis of a collation and analysis of appropriate comparable
transactions, together with evidence of demand within the vicinity of the
subject properties. With the benefit of such transactions we have then
applied these to the Properties, taking into account size, location, aspect
and other material factors.
Investment method
2.3 The Valuation has been carried out using the comparative
and investment methods. In undertaking the Valuation, we have made our
assessment on the basis of a collation and analysis of appropriate comparable
investment and rental transactions, together with evidence of demand within
the vicinity of the subject Properties. With the benefit of such transactions
we have then applied these to the Properties, taking into account size,
location, terms, covenant and other material factors.
Valuation bases
2.4 The basis of value for the Valuation as required by the
Code is Market Value and therefore these valuations have been prepared on a
Market Value basis.
Market Value
2.5 Market Value is defined within RICS Valuation - Global
Standards as:
"The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
Portfolios
2.6 In a valuation of a property portfolio, we have valued
the individual properties separately and we have assumed that the individual
properties have been marketed in an orderly way.
Market Value
Market Value
2.7 We are of the opinion that the aggregate Market Value of
the freehold, heritable and long leasehold interests in the Properties,
subject to the existing tenancies on the assumptions highlighted above, as at
the Valuation Date is:
£350,000,000 (Three Hundred and Fifty Million Pounds).
2.8 For the purposes of Rule 29.5 of the Code, we confirm
that in our opinion the current valuation of the Properties as at the date of
this Valuation Report would not be materially different from the valuation of
the Properties as at the Valuation Date.
2.9 We are not aware of any matter which would materially
affect the Market Value of the Properties which is not disclosed in this
Valuation Report (subject to the assumptions set out in this Valuation Report)
and we are not aware of any matter in relation to this Valuation Report that
we believe should be and has not yet been brought to the attention of the
Addressees.
2.10 The valuation of the Properties reported in the Offeree's
latest published annual or consolidated accounts as at 30 June 2024 was
undertaken by an independent third party valuer without input from us.
Property valuations, and the assumptions underpinning them, are subjective and
therefore differences of opinion can and do occur between valuers. While we
therefore are not instructed to comment on how that independent third party
valuer reached that aggregate valuation, for the purposes of paragraph 130(vi)
of the FCA Technical Note, we consider the modest difference of -6.64% between
the valuation figure in this Valuation Report and the equivalent figure
reported in the Offeree's latest published annual or consolidated accounts to
be as a result of the way in which we and that third party independent valuer
have applied those subjective assumptions.
Responsibility
2.11 For the purposes of the Code, we are responsible for this
Valuation Report and accept responsibility for the information contained in
this Valuation Report and confirm that to the best of our knowledge (having
taken all reasonable care to ensure this is the case), the information
contained in this Valuation Report is in accordance with the facts and
contains no omissions likely to affect its import. This Valuation Report
complies with and is prepared in accordance with, and on the basis of, the
Code. We authorise its contents for the purposes of Rule 29 of the Code.
Knight Frank LLP has given and has not withdrawn its consent to the inclusion
of this Valuation Report in the Rule 2.4 Announcement, the Rule 2.7
Announcement, the Scheme Document and in the Prospectus.
2.12 We accept responsibility (including for the purpose of Rule
5.3.2R(2)(f) of the UK Prospectus Regulation Rules) for the information
contained in this Valuation Report and to the best of our knowledge, the
information contained in this Valuation Report is in accordance with the facts
and the Valuation Report makes no omission likely to affect its import.
Consent
2.13 Knight Frank LLP has given and has not withdrawn its
consent to the inclusion of this Valuation Report in the Rule 2.4
Announcement, the Rule 2.7 Announcement, the Scheme Document and in the
Prospectus published by the Client and/or the Offeree in the form and
context in which it is included.
2.14 We consent to the inclusion of the Valuation and this
Valuation Report and any extracts or references thereto in the Prospectus and
the reference to our name in the form and context in which they are included
in the Prospectus (subject to us first approving the form and context in which
our Valuation Report will appear).
Appendix 1 List of Properties
Property Address - Shopping Centres Tenure Occupancy Date of Inspections
The Gyle Shopping Centre, Gyle Ave, Edinburgh EH12 9JY Heritable Multi Let 12/08/2024
The Marlowes Shopping Centre & Fareham House, Hemel Hempstead, Freehold Multi Let 05/08/2024
Hertfordshire, HP1 1DX
The Exchange, High Rd, Ilford IG1 1RS Freehold Multi Let 15/07/2024
The Mall, Maidstone, Kent, ME15 6AT Freehold Multi Let 08/08/2024
17&Central, 42 Selborne Rd, Walthamstow, London E17 7JR Long Leasehold Multi Let 07/08/2024
The Mall, 159 High Rd, Wood Green, London N22 6YQ Freehold Multi Let 07/08/2024
Appendix 2 General Scope of Valuation Work
General Scope of Valuation Work
As required by the RICS Valuation - Global Standards (the "Red Book") this
General Scope of Valuation Work describes information we will rely on, the
investigations that we will undertake, the limits that will apply to those
investigations and the assumptions we will make, unless we are provided with
or find information to the contrary.
Definitions
"Assumption" is something which it is agreed the valuer can reasonably accept
as being true without specific investigation or verification.
"Property" is the interest which we are instructed to value in land
including any buildings or other improvements constructed upon it.
"Valuation" shall mean any valuation report, supplementary report or
subsequent/update report, produced pursuant to this engagement and any other
replies or information we produce in respect of any such report and/or any
relevant property.
1. Property to be valued
1.1 We will exercise reasonable care and skill (but will not have an
absolute obligation to you) to ensure that the Property, identified by the
address provided in your instructions, is the Property inspected by us and
included within our Valuation. If there is ambiguity as to the Property
address, or the extent of the Property to be valued, this should be drawn to
our attention in your instructions or immediately upon receipt of our
Valuation.
1.2 We will rely upon information provided by you or your legal advisers
relating to the Property to be valued, including any tenancies, sub-tenancies
or other third-party interests. Any information on title and tenure we are
provided with by a third party during the course of our investigations will be
summarised in our Valuation but will be subject to verification by your legal
advisers. We will be under no obligation to make any searches of publicly
available land registers. We will not make or commission any investigations
to verify any of this information. In particular, we will not investigate or
verify that :
(s) all title information relied upon and referred to in our Valuation is
complete and correct,
(t) all documentation is satisfactorily drawn,
(u) there are no undisclosed onerous conditions or restrictions that could
impact on the marketability of the Property valued, and
(v) there is no material litigation pending, relating to the Property
valued.
1.3 Where we provide a plan of the Property in our Valuation this is for
identification only. While the plan reflects our understanding based on the
information provided to us it must not be relied upon to define boundaries,
title or easements.
1.4 Our Valuation will include those items of plant and machinery
normally considered to be part of the service installations to a building and
which would normally pass with the Property on a sale or letting. We will
exclude all other items of process plant, machinery, trade fixtures and
equipment, chattels, vehicles, stock and loose tools, and any tenant's
fixtures and fittings.
1.5 Unless agreed otherwise in writing we will neither investigate nor
include in our Valuation any unproven or unquantified mineral deposits, felled
timber, airspace or any other matter which may or may not be found to be part
of the Property but which would not be known to a buyer or seller on the
valuation date.
1.6 Unless agreed otherwise our Valuation will make the Assumption that
all parts of the Property occupied by the current owner on the valuation date
would be transferred with vacant possession and any tenancies, sub-tenancies
or other third party interests existing on the valuation date will continue.
1.7 Where requested legal title and tenancy information is not provided
in full, in the absence of any information provided to the contrary, our
Valuation will make the Assumption that the subject Property has good title
and is free from any onerous restrictions and/or encumbrances or any such
matter which would diminish its value.
2. Portfolios
2.1 Where instructed to value a portfolio of properties, unless
specifically agreed with you otherwise, we will value each Property separately
on the basis that it is offered individually to the market.
3. Building specification and condition
3.1 We will note the general condition of any building and any building
defect brought to our attention and reflect this in our Valuation. We will
not undertake a detailed investigation of the materials or methods of
construction or of the condition of any specific building element. We will
not test or commission a test of service installations. Unless we become
aware during our normal investigations of anything to the contrary and mention
this in our Valuation, our Valuation will , make the Assumption that:
(w) any building is in a condition commensurate with its age, use and design
and is free from significant defect,
(x) no construction materials have been used that are deleterious, or likely
to give rise to structural defects,
(y) no potentially hazardous or harmful materials are present, including
asbestos,
(z) all relevant statutory requirements relating to use, construction and
fire safety have been complied with,
(aa) any building services, together with any associated computer hardware
and software, are fully operational and free from impending breakdown or
malfunction and
(bb) the supply to the building of electricity, data cable network and
water, are sufficient for the stated use and occupancy.
3.2 If you require information on the structure or condition of any
building our specialist building surveyors can provide a suitable report.as a
separate service.
4. Environment and sustainability
4.1 Our Valuation will reflect the market's perception of the
environmental performance of the Property and any identified environmental
risks as at the valuation date. This may include reflecting information you
provide to us that has been prepared by suitably qualified consultants on
compliance of existing or proposed buildings with recognised sustainability
metrics. Where appropriate we will research any freely available information
issued by public bodies on the energy performance of existing buildings.
4.2 We will investigate whether the Property has a current Energy
Performance Certificate on the relevant government register and report our
findings. As part of our valuation service we will not advise on the extent
to which the Property complies with any other Environmental, Social or
Governance (ESG) metrics or to what extent the building, structure, technical
services, ground conditions, will be impacted by future climate change events,
such as extreme weather, or legislation aimed at mitigating the impact of such
events. If required KF may be able to advise on ESG considerations and their
long-term impact on a Property as a separate service.
5. Ground conditions and contamination
5.1 We may rely on any information you provide to us about the findings
and conclusions of any specialist investigations into ground conditions or any
contamination that may affect the Property. Otherwise our investigations
will be limited to research of freely available information issued by
Government Agencies and other public bodies for flood risk, recorded mining
activity and radon. We will also record any common sources or indicators of
potential contamination observed during our inspection.
5.2 Unless specifically instructed by you to do so, we will not
commission specialist investigations into past or present uses either of the
Property or any neighbouring property to establish whether there is
contamination or potential for contamination, or any other potential
environmental risk. Neither will we be able to advise on any remedial or
preventive measures.
5.3 We will comment on our findings and any other information in our
possession or discovered during our investigations in our Valuation.
5.4 Unless we become aware of anything to the contrary and mention this
in our Valuation, for each Property valued our Valuation will make the
Assumption that:
(cc) the site is physically capable of development or redevelopment, when
appropriate, and that no extraordinary costs will be incurred in providing
foundations and infrastructure,
(dd) there are no archaeological remains on or under the land which could
adversely impact on value,
(ee) the Property is not adversely affected by any form of pollution or
contamination,
(ff) there is no abnormal risk of flooding,
(gg) there are no high voltage overhead cables or large electrical supply
equipment affecting the Property
(hh) the Property does not have levels of radon gas that will require
mitigation work, and
(ii) there are no invasive species present at the Property or within close
proximity to the Property.
(jj) There are no protected species which could adversely affect the use of
the Property.
6. Planning and highway enquiries
6.1 We may research freely available information on planning history and
relevant current policies or proposals relating to any Property being valued
using the appropriate local authority website. We will not commission a
formal local search. Our Valuation will make the Assumption that any
information obtained will be correct, but our findings should not be relied on
for any contractual purpose.
6.2 Unless we obtain information to the contrary, Our Valuation will
make the Assumption that:
(kk) the use to which the Property is put is lawful and that there is no
pending enforcement action,
(ll) there are no local authority proposals that might involve the use of
compulsory purchase powers or otherwise directly affect the Property.
6.3 We do not undertake searches to establish whether any road or
pathways providing access to the Property are publicly adopted. Unless we
receive information to the contrary or have other reason to suspect an
adjoining road or other access route is not adopted, our Valuation will make
the Assumption that all such routes are publicly adopted.
7. Other statutory and regulatory requirements
7.1 A property owner or occupier may be subject to statutory regulations
depending on their use. Depending on how a particular owner or occupier uses
a building, the applicable regulations may require alterations to be made to
buildings. Our valuation service does not include identifying or otherwise
advising on works that may be required by a specific user in order to comply
with any regulations applicable to the current or a proposed use of the
Property. Unless it is clear that similar alterations would be required by
most prospective buyers in the market for a property, our Valuation will make
the Assumption that no work would be required by a prospective owner or
occupier to comply with regulatory requirements relating to their intended
use.
7.2 We will not investigate or comment on licences or permits that may
be required by the current or any potential users of the Property relating to
their use or occupation.
8. Measurements
8.1 Where building floor areas are required for our valuation, unless we
have agreed to rely on floor areas provided by you or a third party, we will
take measurements and calculate the appropriate floor areas for buildings in
accordance with the RICS Property Measurement Professional Standard. These
measurements will either be wholly taken by us during our inspection or from
scaled drawings provided to us and checked by sample measurements on site.
The floor areas will be within a tolerance that is appropriate having regard
to the circumstances and purpose of the valuation instruction.
8.2 Where required, any site areas will be calculated from our
understanding of the boundaries using digital mapping technology, subject to
clause 1.3 above.
9. Investment properties
9.1 Where the Property valued is subject to a tenancy or tenancies, we
will have regard to the market's likely perception of the financial status and
reliability of tenants in arriving at our valuation. We will not undertake
detailed investigations into the financial standing of any tenant. Unless
advised by you to the contrary our Valuation will be make the Assumption that
there are no material rent arrears or breaches of other lease obligations.
10. Development properties
10.1 If we are instructed to value Property for which development,
redevelopment or substantial refurbishment is proposed or in progress, we
strongly recommend that you supply us with build cost and other relevant
information prepared by a suitably qualified construction cost professional,
such as a quantity surveyor. We shall be entitled to rely on such
information in preparing our valuation. If a professional estimate of build
costs is not made available, we will rely on published build cost data but
this must be recognised as being less reliable as it cannot account for
variations in site conditions and design. This is particularly true for
refurbishment work or energy efficiency and environmental upgrades. In the
absence of a professionally produced cost estimate for the specific project we
may need to qualify our report and the reliance that can be placed on our
valuation.
10.2 For Property in the course of development, we will reflect the stage
reached in construction and the costs remaining to be spent at the date of
valuation. We will have regard to the contractual liabilities of the
parties involved in the development and any cost estimates that have been
prepared by the professional advisers to the project. For recently completed
developments we will take no account of any retentions, nor will we make
allowance for any outstanding development costs, fees, or other expenditure
for which there may be a liability.
11. VAT, taxation and costs
11.1 The reported valuation will be our estimate of the price that would be
agreed with no adjustment made for costs that would be incurred by the parties
in any transaction, including any liability for VAT, stamp duty or other
taxes. It is also gross of any mortgage or similar financial encumbrance.
12. Property insurance
12.1 Except to the limited extent provided in clause 3 and clause 4 above we
do not investigate or comment on how potential risks would be viewed by the
insurance market. Our Valuation will be on the Assumption that each Property
would, in all respects, be insurable against all usual risks including fire,
terrorism, ground instability, extreme weather events, flooding and rising
water table at normal, commercially acceptable premiums.
13. Reinstatement cost estimates
13.1 We can only accept a request to provide a building reinstatement cost
estimate for insurance purposes alongside our Valuation of the Property
interest on the following conditions:
(mm) the assessment provided is indicative, without liability and only for
comparison with the current sum insured, and
(nn) The building is not specialised or listed as being of architectural or
historic importance.
13.2 Otherwise we can provide an assessment of the rebuilding cost by our
specialist building surveyors as a separate service.
14. Legal advice
14.1 We are appointed to provide valuation opinion(s) in accordance with our
professional duties as valuation surveyors. The scope of our service is
limited accordingly. We are not qualified legal practitioners and we do not
provide legal advice. If we indicate what we consider the effect of any
provision in the Property's title documents, leases or other legal
requirements may have on value, we strongly recommend that this be reviewed by
a qualified lawyer before you take any action relying on our valuation.
15. Loan security
15.1 If we are requested to comment on the suitability of the Property as a
loan security we are only able to comment on any risk to the reported value
that is inherent in either its physical attributes or the interest valued.
We will not comment on the degree and adequacy of capital and income cover for
an existing or proposed loan or on the borrower's ability to service payments.
Part D - CBRE Valuation Report (Capital & Regional Portfolio)
Valuation Report
In respect of:
Portfolio of 6 properties held by Capital & Regional Plc
On behalf of:
the Addressees as set out below
Date of valuation:
30 June 2024
Contents
01...... Valuation Report. 1
Introduction. 1
Source of Information and Scope of Works 9
Valuation Assumptions. 11
02...... Appendices. 15
Appendix A: Schedule of Properties as at 30 June 2024. 16
Appendix B: Property Details as at 30 June 2024
Valuation Report
Introduction
Report Date 18 September 2024
Valuation Date 30 June 2024
Addressee The Directors
Capital & Regional PLC
First Floor
Strand Bridge House
138-142 Strand London WC2R 1HH
(hereinafter referred to as the "Company")
And
Numis Securities Limited (trading as Deutsche Numis)
45 Gresham Street
London EC2V 7BF
(hereinafter referred to as "Deutsche Numis")
And
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
(hereinafter referred to as "Stifel")
(Deutsche Numis and Stifel together in their capacity as Joint Financial Advisers to the Company)
And
The Directors
NewRiver REIT plc
89, Whitfield Street
London W1T 4DE
(hereinafter referred to as "NewRiver")
And
Jefferies International Limited
100 Bishopsgate
London
EC2N 4J
(hereinafter referred to as "Jefferies")
(Jefferies in their capacity as Financial Adviser to NewRiver)
And
Panmure Liberum Limited
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY
(hereinafter referred to as "Panmure Liberum")
(Panmure Liberum in their capacity as Sole Sponsor and Joint Corporate Broker to NewRiver)
And
Shore Capital Stockbrokers Limited
Cassini House
57 St James's Street
London
SW1A 1LD
(hereinafter referred to as "Shore Capital")
(Shore Capital in their capacity as Joint Corporate Broker to NewRiver)
And
Kinmont Limited
5 Clifford Street
London
W1S 2LG (hereinafter referred to as "Kinmont")
(Kinmont in their capacity as Joint Financial Adviser to NewRiver)
and all the above hereinafter together referred to as the "Addressees"
The Properties 6 properties held by the Company, as set out in the Schedule of Properties
below in Appendix A (each a "Property" and together the "Properties").
Instruction To value without re-inspecting the unencumbered freehold and leasehold
interests (as applicable) of the Properties on the basis of Market Value as at
the Valuation Date in accordance with Terms of Engagement entered into between
CBRE Limited ("CBRE") and the Addressees dated 13 September 2024 (the
"Valuation").
Status of Valuer You have instructed us to act as an External Valuer as defined in the current
version of the RICS Valuation - Global Standards.
Please note that the Valuation may be investigated by the RICS for the
purposes of the administration of the Institution's conduct and disciplinary
regulations in order to ensure compliance with the Valuation Standards.
Purpose and Basis of Valuation The Valuation has been prepared for a Regulated Purpose as defined in the RICS
Valuation - Global Standards (2022) and the UK national supplement current as
at the Valuation Date (the "Red Book").
We understand that this valuation report and the Appendices to it (together
the "Valuation Report") are required for inclusion in an announcement to be
issued by NewRiver in connection with a possible offer by NewRiver for the
entire issued and to be issued ordinary share capital of the Company (the
"Transaction") pursuant to Rule 2.4 of the City Code on Takeovers and Mergers
(the "Takeover Code") (the "Rule 2.4 Announcement")
The Valuation is on the basis of Market Value as defined in the current
edition of the RICS Valuation - Global Standards and set out in Valuation
Assumptions below.
The effective date of our Valuation is 30 June 2024 (the "Valuation Date").
In accordance with the Red Book we have made certain disclosures in connection
with this valuation instruction and our relationship with the Addressees.
Market Value of the Properties as at 30 June 2024 £374,900,000 (THREE HUNDRED AND SEVENTY-FOUR MILLION, NINE HUNDRED THOUSAND
POUNDS) exclusive of VAT, as shown in the Schedule of Capital Values set out
below.
For the avoidance of doubt, we have valued the Properties as real estate and
the values reported above represent 100% of the market values of the assets.
There are no negative values to report.
Our opinion of Market Value is based upon the Scope of Work and Valuation
Assumptions attached, and has been primarily derived using comparable recent
market transactions on arm's length terms.
The Properties are split by tenure as follows.
Property Type Freehold Long Leasehold (250 years) Total
Market Value of Properties held for Investment £297,900,000(5 Properties) £77,000,000 £374,900,000
(1 Property) (6 Properties)
Report Format Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides the individual property details of the Properties.
Market Conditions Heightened global geopolitical tensions, combined with energy security issues,
climate change and increased state-backed cyber-attacks continue to affect
property market stability. While there is recent evidence of economic growth
in the UK, along with expectations of interest rate reductions in the latter
part of 2024, capital markets remain constrained and investors remain
cautious. There are signs that capital values are beginning to stabilise in
several sectors, however, there continues to be a high degree of polarisation
between primary and secondary class assets.
Experience has shown that consumer and investor behaviour can quickly change
during periods of instability. Lending or investment decisions should reflect
any heightened level of volatility and potential for changing market
conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend
that the Valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Compliance with Valuation Standards The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the "Red Book") current as at the
Valuation Date.
The
Val
uat
ion
has
bee
n
pre
par
ed
in
acc
ord
anc
e
wit
h,
and
as
suc
h
is
com
pli
ant
wit
h,
the
req
uir
eme
nts
of
Rul
e
29
of
the
Tak
eov
er
Cod
e.
The
Pro
per
tie
s
hav
e
bee
n
val
ued
by
a
val
uer
who
is
qua
lif
ied
in
acc
ord
anc
e
wit
h
the
Red
Boo
k
and
Rul
e
29.
3
(a)
(ii
)
and
(ii
i)
of
the
Tak
eov
er
Cod
e.
We
con
fir
m
tha
t
we
hav
e
suf
fic
ien
t
and
cur
ren
t
loc
al
and
nat
ion
al
kno
wle
dge
of
the
par
tic
ula
r
pro
per
ty
mar
ket
inv
olv
ed
and
hav
e
the
nec
ess
ary
ski
lls
and
und
ers
tan
din
g
to
und
ert
ake
the
Val
uat
ion
com
pet
ent
ly.
Whe
re
the
kno
wle
dge
and
ski
ll
req
uir
eme
nts
of
the
Red
Boo
k
hav
e
bee
n
met
in
agg
reg
ate
by
mor
e
tha
n
one
val
uer
wit
hin
CBR
E,
we
con
fir
m
tha
t a
lis
t
of
tho
se
val
uer
s
has
bee
n
ret
ain
ed
wit
hin
the
wor
kin
g
pap
ers
,
tog
eth
er
wit
h
con
fir
mat
ion
tha
t
eac
h
nam
ed
val
uer
com
pli
es
wit
h
the
req
uir
eme
nts
of
the
Red
Boo
k.
Thi
s
Val
uat
ion
is
a
pro
fes
sio
nal
opi
nio
n
and
is
exp
res
sly
not
int
end
ed
to
ser
ve
as
a
war
ran
ty,
ass
ura
nce
or
gua
ran
tee
of
any
par
tic
ula
r
val
ue
of
the
sub
jec
t
Pro
per
tie
s.
Oth
er
val
uer
s
may
rea
ch
dif
fer
ent
con
clu
sio
ns
as
to
the
val
ue
of
the
sub
jec
t
Pro
per
tie
s.
Thi
s
Val
uat
ion
is
for
the
sol
e
pur
pos
e
of
pro
vid
ing
the
int
end
ed
use
r
wit
h
the
val
uer
's
ind
epe
nde
nt
pro
fes
sio
nal
opi
nio
n
of
the
val
ue
of
the
sub
jec
t
Pro
per
tie
s
as
at
the
Val
uat
ion
Dat
e.
Sustainability Considerations Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions The Properties' details on which each Valuation is based are as set out in
this Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or None.
Departures from Standard Assumptions
Independence The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) are less than 5.0% of the total annual UK revenues.
The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from NewRiver (or other companies forming part of the same group of companies)
are less than 5.0% of the total annual UK revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, NewRiver or any of the Properties or in the outcome
of the Valuation.
Previous Involvement and Conflicts of Interest We confirm that we have valued 2 of the Properties on behalf of the Company on
a half-yearly basis for financial reporting purposes for in excess of 10
years, we have valued 1 of the Properties on a half-yearly basis for financial
reporting purposes for in excess of 5 years and the other 3 we have valued on
a half-yearly basis for financial reporting purposes for less than 5 years.
The most recent valuation being as at 30 June 2024.
From time to time, CBRE provides agency or professional services to the
Company.
CBRE provides some agency and/or professional services to some of the
occupiers of the Properties and where this occurs, any conflict arising is
managed through an information barrier.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that you also consider this to be the
case.
We confirm the Retail Capital Markets team of CBRE has provided advice to
NewRiver on this Transaction and all parties have agreed to this on the basis
that the agreed information barriers between the two teams have been put in
place. CBRE has carried out agency and some professional services on behalf of
NewRiver for in excess of 10 years on an ad hoc basis.
We confirm that we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict-of-interest checks have been retained within the
working papers.
Disclosure The principal signatory of this Valuation Report has continuously been the
signatory of valuations for the Company of: The Mall, Wood Green, 17&
Central, Walthamstow and The Exchange, Ilford, since December 2022; and for
The Mall, Maidstone, The Gyle, Edinburgh and The Marlowes, Hemel Hempstead,
since December 2023.
CBRE has continuously been carrying out valuation instructions for the Company
since 2007. CBRE has carried out agency and some professional services on
behalf of the Company for in excess of 10 years on an ad hoc basis.
Responsibility For the purposes of Rule 29 of the Takeover Code, we are responsible for this
Valuation Report and accept responsibility for the information contained in
this Valuation Report and confirm that to the best of our knowledge (having
taken all reasonable care to ensure that such is the case) the information
contained in this Valuation Report is in accordance with the facts and this
Valuation Report makes no omissions likely to affect its import.
Save for any responsibility arising under the Takeover Code to any person as
and to the extent there provided, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in accordance with this Valuation Report or our statement above.
Reliance Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
i) Addressees of the Report; and
ii) the parties who have received prior written consent
from CBRE in the form of a reliance letter
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the purpose of Valuation.
Publication Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear (such approval to not be unreasonably withheld
or delayed).
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully Yours faithfully
Ana Burke Peter Stoughton-Harris
MRICS BSc (Hons) MRICS
Director Executive Director
RICS Registered Valuer RICS Registered Valuer
For and on behalf of CBRE Limited +447827993001 For and on behalf of CBRE Limited
Ana.Burke@cbre.com +44 7770847303
Peter.Stoughton-Harris@cbre.com (mailto:Peter.Stoughton-Harris@cbre.com)
Report Format
Appendix A of this Valuation Report contains the Schedule of Properties.
Appendix B provides the individual property details of the Properties.
Market Conditions
Heightened global geopolitical tensions, combined with energy security issues,
climate change and increased state-backed cyber-attacks continue to affect
property market stability. While there is recent evidence of economic growth
in the UK, along with expectations of interest rate reductions in the latter
part of 2024, capital markets remain constrained and investors remain
cautious. There are signs that capital values are beginning to stabilise in
several sectors, however, there continues to be a high degree of polarisation
between primary and secondary class assets.
Experience has shown that consumer and investor behaviour can quickly change
during periods of instability. Lending or investment decisions should reflect
any heightened level of volatility and potential for changing market
conditions.
It is important to note that the conclusions set out in this Valuation Report
are valid as at the Valuation Date only. Where appropriate, we recommend
that the Valuation is closely monitored, as we continue to track how markets
respond to evolving events.
Portfolios and Aggregation
We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.
Compliance with Valuation Standards
The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the "Red Book") current as at the
Valuation Date.
The Valuation has been prepared in accordance with, and as such is compliant
with, the requirements of Rule 29 of the Takeover Code.
The Properties have been valued by a valuer who is qualified in accordance
with the Red Book and Rule 29.3 (a) (ii) and (iii) of the Takeover Code. We
confirm that we have sufficient and current local and national knowledge of
the particular property market involved and have the necessary skills and
understanding to undertake the Valuation competently.
Where the knowledge and skill requirements of the Red Book have been met in
aggregate by more than one valuer within CBRE, we confirm that a list of those
valuers has been retained within the working papers, together with
confirmation that each named valuer complies with the requirements of the Red
Book.
This Valuation is a professional opinion and is expressly not intended to
serve as a warranty, assurance or guarantee of any particular value of the
subject Properties. Other valuers may reach different conclusions as to the
value of the subject Properties. This Valuation is for the sole purpose of
providing the intended user with the valuer's independent professional opinion
of the value of the subject Properties as at the Valuation Date.
Sustainability Considerations
Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.
Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.
Climate Risk Legislation
From June 2019, the Climate Change Act 2008 (2050 Target Amendment) Order 2019
commits the UK Government to reducing greenhouse gas emissions by 100% from
1990 levels (i.e. a Net Zero position) by 2050. In 2021 an interim target was
set, to reduce emissions by 78% by 2035, by decarbonising electricity
generation. This means that fossil fuels used in building, such as natural
gas for heating, are incompatible with this commitment. The proposal to update
the Minimum Energy Efficiency Standards, to require all non-domestic
properties to a minimum EPC rating of B in 2030 has not been ratified and in
the absence of any commentary from the current administration, we assume
landlords will continue to work towards this target.
We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.
The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.
Assumptions
The Properties' details on which each Valuation is based are as set out in
this Valuation Report. We have made various assumptions as to tenure, letting,
taxation, town planning, and the condition and repair of buildings and sites -
including ground and groundwater contamination - as set out below.
If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.
Variations and/or
Departures from Standard Assumptions
None.
Independence
The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) are less than 5.0% of the total annual UK revenues.
The total annual fees, including the fee for this assignment, earned by CBRE
(or other companies forming part of the same group of companies within the UK)
from NewRiver (or other companies forming part of the same group of companies)
are less than 5.0% of the total annual UK revenues.
It is not anticipated this situation will vary in the financial year to 31
December 2024.
We confirm that neither the valuers concerned nor CBRE have any personal
interest in the Company, NewRiver or any of the Properties or in the outcome
of the Valuation.
Previous Involvement and Conflicts of Interest
We confirm that we have valued 2 of the Properties on behalf of the Company on
a half-yearly basis for financial reporting purposes for in excess of 10
years, we have valued 1 of the Properties on a half-yearly basis for financial
reporting purposes for in excess of 5 years and the other 3 we have valued on
a half-yearly basis for financial reporting purposes for less than 5 years.
The most recent valuation being as at 30 June 2024.
From time to time, CBRE provides agency or professional services to the
Company.
CBRE provides some agency and/or professional services to some of the
occupiers of the Properties and where this occurs, any conflict arising is
managed through an information barrier.
We do not consider that this previous involvement represents a conflict of
interest and you have confirmed to us that you also consider this to be the
case.
We confirm the Retail Capital Markets team of CBRE has provided advice to
NewRiver on this Transaction and all parties have agreed to this on the basis
that the agreed information barriers between the two teams have been put in
place. CBRE has carried out agency and some professional services on behalf of
NewRiver for in excess of 10 years on an ad hoc basis.
We confirm that we are not aware of any further conflicts of interest that
would prevent us from exercising the required levels of independency and
objectivity in undertaking the Valuation.
Copies of our conflict-of-interest checks have been retained within the
working papers.
Disclosure
The principal signatory of this Valuation Report has continuously been the
signatory of valuations for the Company of: The Mall, Wood Green, 17&
Central, Walthamstow and The Exchange, Ilford, since December 2022; and for
The Mall, Maidstone, The Gyle, Edinburgh and The Marlowes, Hemel Hempstead,
since December 2023.
CBRE has continuously been carrying out valuation instructions for the Company
since 2007. CBRE has carried out agency and some professional services on
behalf of the Company for in excess of 10 years on an ad hoc basis.
Responsibility
For the purposes of Rule 29 of the Takeover Code, we are responsible for this
Valuation Report and accept responsibility for the information contained in
this Valuation Report and confirm that to the best of our knowledge (having
taken all reasonable care to ensure that such is the case) the information
contained in this Valuation Report is in accordance with the facts and this
Valuation Report makes no omissions likely to affect its import.
Save for any responsibility arising under the Takeover Code to any person as
and to the extent there provided, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in accordance with this Valuation Report or our statement above.
Reliance
Save as set out in "Responsibility" above, the contents of this Valuation
Report may only be relied upon by:
i) Addressees of the Report; and
ii) the parties who have received prior written consent
from CBRE in the form of a reliance letter
for the specific purpose set out herein and no responsibility is accepted to
any third party for the whole or any part of its contents.
No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the purpose of Valuation.
Publication
Neither the whole nor any part of our Valuation Report nor any references
thereto may be included in any published document, circular or statement nor
published in any way without our prior written approval of the form and
context in which it will appear (such approval to not be unreasonably withheld
or delayed).
Such publication of, or reference to this Valuation Report will not be
permitted unless it contains a sufficient contemporaneous reference to any
departure from the Red Book or the incorporation of the special assumptions
referred to herein.
Yours faithfully
Ana Burke
MRICS
Director
RICS Registered Valuer
For and on behalf of CBRE Limited +447827993001
Ana.Burke@cbre.com
Yours faithfully
Peter Stoughton-Harris
BSc (Hons) MRICS
Executive Director
RICS Registered Valuer
For and on behalf of CBRE Limited
+44 7770847303
Peter.Stoughton-Harris@cbre.com (mailto:Peter.Stoughton-Harris@cbre.com)
Sources of Information and Scope of Works
Sources of Information We have carried out our work based upon information supplied to us by the
Company and their professional advisors, as set out within this Valuation
Report, which we have assumed to be correct and comprehensive, including:
1. Tenancy and management information, supplied on the 28(th) May and
updated ad hoc until the valuation date;
2. Capex information, supplied on the 5(th) June;
3. Measured floor areas; and
4. Detailed comments from the Company on our draft Valuations,
principally at a draft valuation meeting on the 17(th) June.
The Properties Our Valuation Report contains a brief summary of the Property details on which
our Valuation has been based.
Inspection As part of our valuation instruction from the Company for financial reporting
purposes, the Properties have been subject to external inspections each year.
As instructed, we have not re-inspected all the Properties for the purpose of
this Valuation.
With regard to those Properties which have not been subject to re-inspection,
the Company has confirmed that they are not aware of any material changes to
the physical attributes of the Properties, or the nature of their location,
since the last inspection. We have assumed this advice to be correct.
Where Properties have not been reinspected, the valuer will not carry out the
usual range of enquiries performed during a full inspection of these
Properties and will make the appropriate assumptions based on the information
provided or available that, without a full inspection, cannot be verified. The
instructing parties acknowledge and accept the heightened and inherent
uncertainty and risks relying upon a valuation prepared on a desktop basis.
Areas We have not measured the Properties but have relied upon the floor areas
provided to us by you or your professional advisors, which we have assumed to
be correct and comprehensive, and which you have advised us have been
calculated using the: Gross Internal Area (GIA), Net Internal Area (NIA) or
International Property Measurement Standard (IPMS) 3 - Office, measurement
methodology as set out in the latest edition of the RICS Property Measurement
Standards.
Environmental Considerations We have not been instructed to make any investigations in relation to the
presence or potential presence of contamination in land or buildings or the
potential presence of other environmental risk factors and to assume that if
investigations were made to an appropriate extent then nothing would be
discovered sufficient to affect value.
We have not carried out investigation into past uses, either of the Properties
or of any adjacent lands, to establish whether there is any potential for
contamination from such uses or sites, or other environmental risk factors and
have therefore assumed that none exist.
Sustainability Considerations In carrying out this Valuation, we have considered the impact of
sustainability factors on the value of the Properties. Based on our
inspections and our review of the information that was available to us, we
have not identified any risk factors which, in our opinion, would affect
value. However, CBRE gives no warranty as to the absence of such risk
factors in relation to sustainability.
Services and Amenities We understand that the Properties are located in an area served by mains gas,
electricity, water and drainage.
None of the services have been tested by us.
Enquiries regarding the availability of utilities/services to the development
schemes are outside the scope of our Valuation Report.
Repair and Condition We have not carried out building surveys, tested services, made independent
site investigations, inspected woodwork, exposed parts of the structure which
were covered, unexposed or inaccessible, nor arranged for any investigations
to be carried out to determine whether or not any deleterious or hazardous
materials or techniques have been used, or are present, in any part of the
Properties. We are unable, therefore, to give any assurance that the
Properties are free from defect.
Town Planning We have not undertaken planning enquiries.
Titles, Tenures and Lettings Details of title/tenure under which the Properties are held and of lettings to
which it is subject are as supplied to us. We have not generally examined nor
had access to all the deeds, leases or other documents relating thereto. Where
information from deeds, leases or other documents is recorded in this
Valuation Report, it represents our understanding of the relevant documents.
We should emphasise, however, that the interpretation of the documents of
title (including relevant deeds, leases and planning consents) is the
responsibility of your legal adviser.
We have not conducted credit enquiries on the financial status of any tenants.
We have, however, reflected our general understanding of purchasers' likely
perceptions of the financial status of tenants.
Introduction An Assumption is defined in the Red Book Glossary and VPS 4 to be a
"supposition taken to be true" (an "Assumption").
Assumptions are facts, conditions or situations affecting the subject of, or
approach to, a valuation that it has been agreed need not be verified by the
valuer as part of the valuation process. Assumptions are made when it is
reasonable for the valuer to accept that something is true without the need
for specific investigation.
The Company has confirmed and we confirm that our Assumptions are correct as
far as the Company and we, respectively, are aware. In the event that any of
these Assumptions prove to be incorrect then our Valuations should be
reviewed. The principal Assumptions which we have made are stated within
this Valuation Report.
For the avoidance of doubt, the Assumptions made do not affect compliance with
the approach to Market Value under the Red Book.
Capital Values The Valuation has been prepared on the basis of "Market Value", which is
defined in the Red Book as:
"The estimated amount for which an asset or liability should exchange on the
Valuation Date between a willing buyer and a willing seller in an arm's length
transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion."
The Valuation represents the figure that would appear in a hypothetical
contract of sale at the Valuation Date. No adjustment has been made to this
figure for any expenses of acquisition or realisation - nor for taxation which
might arise in the event of a disposal.
No account has been taken of any inter-company leases or arrangements, nor of
any mortgages, debentures or other charge.
No account has been taken of the availability or otherwise of capital based
Government or European Community grants.
Taxation, Costs and Realisation Costs As stated above, no allowances have been made for any expenses of realisation
nor for taxation which might arise in the event of a disposal.
Our Valuations reflect purchasers' statutory and other normal acquisition
costs.
VAT We have not been advised whether the Properties are elected for VAT.
All rents and capital values stated in this Valuation Report are exclusive of
VAT.
Net Annual Rent Net annual rent is defined for the purposes of this transaction as "the
current income or income estimated by the valuer:
(i) ignoring any special receipts or deduction arising from the property;
(ii) excluding Value Added Tax and before taxation (including tax on profits
and any allowances for interest on capital or loans); and
(iii) after making deductions for superior rents (but not for amortisation),
and any disbursements including, if appropriate, expenses of managing the
property and allowances to maintain it in a condition to command its rent".
Estimated Net Annual Rental Value The estimated net annual rental value is based on the current rental value of
each of the Properties. The rental value reflects the terms of the leases
where the Properties, or parts thereof, are let at the Valuation Date. Where
the Properties, or parts thereof, are vacant at the Valuation Date, the rental
value reflects the rent we consider would be obtainable on an open market
letting as at the Valuation Date.
Rental Values Unless stated otherwise rental values indicated in our Valuation Report are
those which have been adopted by us as appropriate in assessing the capital
value and are not necessarily appropriate for other purposes, nor do they
necessarily accord with the definition of Market Rent in the Red Book, which
is as follows:
"The estimated amount for which an interest in real property should be leased
on the Valuation Date between a willing lessor and a willing lessee on
appropriate lease terms in an arm's length transaction, after proper marketing
and where the parties had each acted knowledgeably, prudently and without
compulsion."
Fixtures, Fittings and Equipment Where appropriate we have regarded the shop fronts of retail and showroom
accommodation as forming an integral part of the building.
Landlord's fixtures such as lifts, escalators, central heating and other
normal service installations have been treated as an integral part of the
building and are included within our Valuations.
Process plant and machinery, tenants' fixtures and specialist trade fittings
have been excluded from our Valuations.
All measurements, areas and ages quoted in our Valuation Report are
approximate.
Environmental Matters In the absence of any information to the contrary, we have assumed that:
a) the Property/Properties is/are not contaminated and is not adversely
affected by any existing or proposed environmental law;
b) any processes which are carried out on the Property/Properties which
are regulated by environmental legislation are properly licensed by the
appropriate authorities;
c) in England and Wales, the Property/Properties possesses current
Energy Performance Certificates (EPCs) as required under the Government's
Energy Performance of Buildings Directive - and that they have an energy
efficient standard of 'E', or better. Under the Energy Efficiency (Private
Rented Property) (England and Wales) Regulations 2015 it became unlawful for
landlords to rent out business or residential premise from 1st April 2018 -
unless the site has reached a minimum EPC rating of an 'E', or secured a
relevant exemption. In Scotland, we have assumed that the Property/Properties
possesses current EPCs as required under the Scottish Government's Energy
Performance of Buildings (Scotland) Regulations - and that they meet energy
standards equivalent to those introduced by the 2002 building regulations. The
Assessment of Energy Performance of Non-Domestic Buildings (Scotland)
Regulations 2016 requires building owners to commission an EPC and Action Plan
for sale or new rental of non-domestic buildings bigger than 1,000 sq m that
do not meet 2002 building regulations energy standards. Action Plans contain
building improvement measures that must be implemented within 3.5 years,
subject to certain exemptions;
d) In January 2021 the Government set out proposals in England and Wales
for 'improving the energy performance of privately rented homes'. The key
tenets of the proposals are to: reduce emissions; tackle fuel poverty; improve
asset quality; reduce energy bills; enhance energy security; and support
associated employment. The proposals were wide ranging and included new
demands on residential landlords through Energy Performance Certificates
('EPCs').
Existing PRS Regulations set a minimum standard of EPC Band E for residential
units to be lettable. The Government proposals see this threshold being raised
to EPC Band C for all new tenancies created from 01 April 2025 and for all
existing tenancies by 1 April 2028.
The principle for relevant building works is to be 'fabric first' meaning
maximisation of components and materials that make up the building fabric to
enhance, for example, insulation, ventilation and air-tightness. The proposals
also cite; compliance measures and penalties for landlords, letting agents and
local authorities; and affordability support for carrying out necessary works.
The implication was (as with the existing EPC Band E requirement) that private
rented units may effectively be rendered unlettable if they failed to meet or
exceed the minimum EPC requirement.
On 20 September 2023 the Prime Minister announced revisions to the PRS
Regulations such that residential landlords will not be fined if they do not
meet these requirements. It was not specified if this denotes a delay to the
effective fates or the removal of the penalty.
In addition the Prime Minister announced that Boiler Upgrade Scheme subsidies
will be increased from £5,000 to £7,500, and the timeframe for removal of
gas fired boilers delayed until 2035.
The change in policy is more towards incentivising change as opposed to
enforcement.
The UK's Net Zero 2050 pledge is still being upheld although future revisions
are not out of the question, particularly in the event of a potential change
in Government. It is likely that institutional landlords in particular will
continue to target energy efficiency given policy change uncertainty and the
ever increasing focus on ESG; we therefore expect EPC ratings to continue to
be a focus for residential investors and occupiers in the UK;
e) the Properties are either not subject to flooding risk or, if they
are, that sufficient flood defences are in place and that appropriate building
insurance could be obtained at a cost that would not materially affect the
capital value; and
f) invasive species such as Japanese Knotweed are not present on the
Properties.
High voltage electrical supply equipment may exist within, or in close
proximity of, the Properties. The National Radiological Protection Board
(NRPB) has advised that there may be a risk, in specified circumstances, to
the health of certain categories of people. Public perception may, therefore,
affect marketability and future value of the Properties. Our Valuation
reflects our current understanding of the market and we have not made a
discount to reflect the presence of this equipment.
Repair and Condition In the absence of any information to the contrary, we have assumed that:
a) there are no abnormal ground conditions, nor archaeological remains,
present which might adversely affect the current or future occupation,
development or value of the Properties;
b) the Properties are free from rot, infestation, structural or latent
defect;
c) no currently known deleterious or hazardous materials or suspect
techniques, including but not limited to Composite Panelling, ACM Cladding,
High Alumina Cement (HAC), Asbestos, Reinforced Autoclaved Aerated Concrete
(Raac), have been used in the construction of, or subsequent alterations or
additions to, the Properties; and
d) the services, and any associated controls or software, are in working
order and free from defect.
We have otherwise had regard to the age and apparent general condition of the
Properties. Comments made in the property details do not purport to express an
opinion about, or advise upon, the condition of uninspected parts and should
not be taken as making an implied representation or statement about such
parts.
Title, Tenure, Lettings, Planning, Taxation and Statutory & Local Unless stated otherwise within this Valuation Report, and in the absence of
Authority Requirements any information to the contrary, we have assumed that:
a) the Properties possess a good and marketable title free from any
onerous or hampering restrictions or conditions;
b) the building has been erected either prior to planning control, or in
accordance with planning permissions, and has the benefit of permanent
planning consents or existing use rights for their current use;
c) the Properties are not adversely affected by town planning or road
proposals;
d) the building complies with all statutory and local authority
requirements including building, fire and health and safety regulations, and
that a fire risk assessment and emergency plan are in place;
e) only minor or inconsequential costs will be incurred if any
modifications or alterations are necessary in order for occupiers of the
Properties to comply with the provisions of the Disability Discrimination Act
1995 (in Northern Ireland) or the Equality Act 2010 (in the rest of the UK);
f) all rent reviews are upward only and are to be assessed by
reference to full current market rents;
g) there are no tenant's improvements that will materially affect our
opinion of the rent that would be obtained on review or renewal;
h) tenants will meet their obligations under their leases, and are
responsible for insurance, payment of business rates, and all repairs, whether
directly or by means of a service charge;
i) there are no user restrictions or other restrictive covenants in
leases which would adversely affect value;
j) where more than 50% of the floorspace of the Properties is in
residential use, the Landlord and Tenant Act 1987 (the "Act") gives certain
rights to defined residential tenants to acquire the freehold/head leasehold
interest in the Properties. Where this is applicable, we have assumed that
necessary notices have been given to the residential tenants under the
provisions of the Act, and that such tenants have elected not to acquire the
freehold/head leasehold interest. Disposal on the open market is therefore
unrestricted;
k) where appropriate, permission to assign the interest being valued
herein would not be withheld by the landlord where required;
l) vacant possession can be given of all accommodation which is unlet
or is let on a service occupancy; and
m) Land Transfer Tax (or the local equivalent) will apply at the rate
currently applicable.
In the UK, Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land
and Buildings Transaction Tax (LABTT) in Scotland or Land Transaction Tax
(LTT) in Wales, will apply at the rate currently applicable.
Appendices
Appendix A: Schedule of Properties as at 30 June 2024
Address Property Type Tenure Most Recent Inspection Date Ownership Purpose
The Mall Wood Green, 159 High Street, London, United Kingdom, N22 6YQ Retail Freehold 29 June 2024 Investment
The Mall, Maidstone, Pad's Hill, Maidstone, United Kingdom, ME15 6AT Retail Freehold 29 November 2023 Investment
The Exchange, Ilford, High Street, London, United Kingdom, IG1 1RS Retail Freehold 30 April 2024 Investment
17 & Central, Walthamstow, 42 Selbourne Road, London, United Kingdom, E17 Retail Long Leasehold 29 June 2024 Investment
7JR
(250 years)
Marlowes, Hemel Hempstead, Hemel Hempstead, Hemel Hempstead, United Kingdom, Retail Freehold 24 November 2023 Investment
HP1 1DX
The Gyle Edinburgh, Gyle Ave, Edinburgh, United Kingdom, EH12 9JY Retail Heritable title 6 July 2024 Investment
Appendix B: Property Details as at 30 June 2024
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
The Gyle Shopping Centre, Gyle Avenue, Edinburgh, EH12 9JY The property is located 6 km west of Edinburgh city centre. The majority of leases are drawn on full repairing and insuring terms. In £6,283,109 (Excl.) £5,431,949 (Excl.) £42,000,000
general, the retail unit rents are subject to five- yearly, upwards- only rent
The property is held on heritable title. reviews to market rental value. In addition to these tenancies, there are
several licences held within the centre, in respect of kiosks, advertising,
This enclosed centre is anchored by Morrisons and Marks & Spencer, which telecom stations and sundry mall provisions.
are located on western and eastern ends of the centre respectively with all
other retail units located in between two anchor stores. The food court is There are also a number of concessionary rents and short-term inclusive
located at the first floor and consists of six food outlets. lettings that have been granted.
The property benefits from 2,500 surface car parking spaces. The bus stop is
located on the site with the tram service being located in the immediate
vicinity connecting The Gyle with Edinburgh city centre and the airport.
The anchor stores, Morrisons and Marks and Spencer are let for a long term
(125+ years) at a peppercorn rent albeit they contribute to the service charge
of the centre.
Other major occupiers include Next, Boots and WH Smith and their combined
income is c.40% of the total income however the lease for Boots expires in
July 2025.
The property benefits from weighted average unexpired lease term of 3.16 years
to expiry and 2.89 years to break (excluding mall income).
The property's occupancy rate is 93.05% by ERV albeit there are anumber of
temporary leases included in this figure.
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
The Mall, Wood Green, 159 High Road, London, N22 6YQ The property is located in the north London suburb of Wood Green, The majority of leases are drawn on full repairing and insuring terms. In £13,043,519 (Excl.) £12,781,062 (Excl.) £152,500,000
approximately 6 miles north of central London. general, the retail unit rents are subject to five- yearly, upwards- only rent
reviews to market rental value. In addition to these tenancies, there are
The property is held on a freehold title. several licences held within the centre, in respect of kiosks, advertising,
telecom stations and sundry mall provisions.
This enclosed centre comprises two separate elements with frontage to either
side of the High Street, which are connected by an enclosed bridge on the There are also a number of concessionary rents and short-term inclusive
first floor. The centre is anchored by Primark, Travelodge, Cineworld, H&M lettings that have been granted.
and TK Maxx. There is food and beverage throughout with a concentration of
food outlets in part of the north side of the scheme on the ground floor.
The property benefits from a multi storey car park with 1,500 parking spaces.
There is good public transport provision with Wood Green Underground Station
approximately 3 minutes' walk.
Other major occupiers include Boots, Argos and Pure Gym. The top five
occupiers combined income is c.25% of the total income with H&M in the
process of renewing their lease, which has expired.
The property benefits from weighted average unexpired lease term of 5.42 years
to expiry and 3.96 years to break (excluding car parking income and mall
income).
The property's occupancy rate is 95.29% by ERV.
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
17 & Central, 42 Selborne Road, Walthamstow, E17 7JR Walthamstow is located approximately 9 miles north east of Central London in The majority of leases are drawn on full repairing and insuring terms. In £5,995,877 (Excl.) £6,937,707 (Excl.) £77,000,000
the London Borough of Waltham Forest. general, the retail unit rents are subject to five- yearly, upwards- only rent
reviews to market rental value. In addition to these tenancies, there are
The property is held on a Long Lease from 23 June 2022 for 250 years. several licences held within the centre, in respect of kiosks, advertising,
telecom stations and sundry mall provisions.
This enclosed centre is anchored by Asda and Lidl supermarkets, located on
western and eastern ends of the centre respectively with all other retail There are also a number of concessionary rents and short-term inclusive
units located in between these stores. The old food court has been lettings that have been granted.
transformed into a modern food and leisure destination.. The space consists
of a number of food outlets, a bar, outdoor terrace, events space and a
childrens soft play facility.. There is a multi-storey car park located
within the property providing parking for approximately 500 vehicles accessed
via Selborne Road.
The scheme is located adjacent to Walthamstow Underground Station and bus
station, a short walk from the centre.
Pplans to redevelop and extend The Mall, Walthamstow were approved by London
Borough of Waltham Forest's Planning Committee on 27 January 2021.
This approved scheme will provide new retail space, 495 new homes for private
rent (Phase 1), 43 new homes for private sale, a new external children's play
area and re-landscaped town square. The works began in mid-July 2022 and
completion of Phase 1 is scheduled for mid-2025.
Other major occupiers include TK Maxx, The Gym and Sportsdirect. Top five
occupiers account for c.30% of the total income.
The property benefits from weighted average unexpired lease term of 5.96 years
to expiry and 4.18 years to break (excluding car parking income and mall
income).
The property's occupancy rate is 94.60% by ERV (with the exclusion of the
units under reconfiguration to facilitate Phase 1 of the new development)
albeit there are a number of temporary let leases included in this figure.
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
The Exchange, Ilford, High Road, Ilford, IG1 1RS Ilford is located approximately 9 miles northeast of Central London in the The majority of leases are drawn on full repairing and insuring terms. In £5,604,935 (Excl.) £6,413,615 (Excl.) £62,300,000
London Borough of Redbridge. general, the retail unit rents are subject to five- yearly, upwards- only rent
reviews to market rental value. In addition to these tenancies, there are
The property is held on a freehold title. several licences held within the centre, in respect of kiosks, advertising,
telecom stations and sundry mall provisions.
This enclosed centre is retail anchored by TK Maxx, who have relocated to the
mid-level of the former Debenhams store, as well as a two-level Next store. There are also a number of concessionary rents and short-term inclusive
The Instant Group, which occupied the top level of the former Debenhams store, lettings that have been granted.
have exercised their break and will vacate in September 2024. The unit will be
split, and part of the unit is under offer to a childrens soft play centre.
The lower level of the former Debenhams unit is under offer to a supermarket
operator. The NHS are also now in occupation on a 25 year lease.
The property benefits from fronting on to the new entrance at Ilford Railway
Station, for the Elizabeth Line. The scheme is also well connected to the
national road system with the M25 and M11 situated 11 miles and 4 miles
respectively from Ilford. There is a multi-storey car park located within the
property providing parking for approximately 1,200 vehicles.
The combined income of the top 5 tenants is c.26% of the total income.
The property benefits from weighted average unexpired lease term of 5.71 years
to expiry and 4.86 years to break (excluding car parking income and mall
income).
The property's occupancy rate is 92.19% by ERV albeit there are a number of
temporary letting leases included in this figure.
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
The Mall, Pads Hill, Maidstone, ME15 6AT Maidstone is largest town in Kent and is the municipal centre for the county. The majority of leases are drawn on full repairing and insuring terms. In £5,132,618(Excl.) £5,191,367(Excl.) £31,300,000
The town lies 32 miles from the south east of London. general, the retail unit rents are subject to five-yearly, upwards-only rent
reviews to market rental value. In addition to these tenancies, there are
The property is held on a freehold title. several licences held within the centre, in respect of kiosks, advertising,
telecom stations and sundry mall provisions.
This enclosed centre comprises retail accommodation arranged over 3 floors.
The centre is anchored by B&M, Boots, Matalan, Sportsdirect and Next. The There are also a number of concessionary rents and short-term inclusive
centre is adjacent to a large Sainsbury's and is located in Maidstone town lettings that have been granted.
centre.
The town's main bus station is located between the Property and the adjacent
Sainsbury's and provides direct access to the scheme. Buses run to several
local and regional destinations. There is a multi-storey car park located
within the property providing parking for approximately 1,050 vehicles.
Other tenants include Pure Gym, Iceland and Lewis Home Retail (TJ Hughes). The
combined income of the top 5 tenants is c.23% of the total income.
The property benefits from weighted average unexpired lease term of 5.55 years
to expiry and 4.18 years to break (excluding car parking income and mall
income).
The property's occupancy rate is 88.52% by ERV albeit there are a number of
temporary letting leases included in this figure.
Property Description, Age and Tenure Terms of Existing Tenancies Annual Rent receivable as at 30 June 2024 Estimated Rental Value (ERV) as at 30 June 2024 Market Value as at 30 June 2024
The Marlowes, Hemel Hempstead, HP2 4TU The property is located in Hemel Hempstead town centre, approximately 24 miles The majority of leases are drawn on full repairing and insuring terms. In £2,746,420 (Excl.) £3,197,612 (Excl.) £9,800,000
north of central London. general, the retail unit rents are subject to five- yearly, upwards- only rent
reviews to market rental value. In addition to these tenancies, there are
The property is held on freehold title. several licences held within the centre, in respect of kiosks, advertising,
telecom stations and sundry mall provisions.
The shopping centre was built in 1990 with a main mall running north to south
and two connecting malls to the Marlowes. Most of the trading takes place on There are also a number of concessionary rents and short-term inclusive
the ground floor, with some on the first floor in the North and South Courts. lettings that have been granted.
Hemel Hempstead railway station,situated 1.3 miles southeast of the property
is on the London Midland line, providing a frequent and direct train service
to London Euston, with a fast journey time of only 27 minutes.
The property benefits from a rooftop multi-story car park providing 1,200
spaces. The scheme is served by a number of bus routes, which are accessed
adjacent to the centre.
Major occupiers include B&M, Pure Gym, New Look, Metro Bank, Sportsdirect
and Bank of Scotland and their combined income is c.46% of the total income
however New Look and Sportsdirect have lease expiry/tenant break option in the
next 24 months. Marks & Spencer also have a store entrance directly
accessing the centre which is held on a long lease (82 years) at a peppercorn
rent.
The property benefits from weighted average unexpired lease term of 3.99 years
to expiry and 3.31 years to break (excluding car parking income and mall
income).
The property's occupancy rate is 85.60% by ERV albeit there are a number of
temporary letting leases included in this figure.
3 appendix 3
NEWRIVER QUANTIFIED FINANCIAL BENEFITS STATEMENT
Part A
Paragraph 4 of this announcement contains statements of the estimated cost
savings and synergies expected to arise from any Combination (together, the
"Quantified Financial Benefits Statement").
A copy of the Quantified Financial Benefits Statement is set out below:
The NewRiver Directors, having undertaken a review and analysis of the
potential cost savings of the Combined Group, as well as taking into account
factors they can influence, believe the Combined Group could deliver
shareholder value through the expected realisation of approximately £7.3
million of gross pre-tax run-rate recurring annual cost synergies. These would
be expected to be realised primarily from consolidation of:
· board, senior management, central and support
functions and savings related to Capital & Regional's status as a publicly
traded company (which would no longer be required on a standalone basis),
together with third party support, including professional advisory fees, which
would be expected to contribute approximately 85 per cent. (approximately
£6.2 million) of the gross pre-tax run-rate recurring annual cost synergies;
and
· head office and other operating infrastructure
such as technology and IT, which would be expected to contribute approximately
15 per cent. (approximately £1.1 million) of the gross pre-tax run-rate
recurring annual cost synergies.
Potential areas of dis-synergy have been considered by the NewRiver Directors,
with the principal area of dis-synergy being income generated from property
management services (equating to approximately £1.1 million per annum), which
is assumed to cease on completion of any Combination because Capital &
Regional provides these services to tenants but NewRiver would intend to align
this approach with its existing portfolio whereby these services are provided
by a third party specialist. Potential cost savings associated with the
outsourcing of these services have been reflected in the expected recurring
cost synergy figure.
Accordingly, the NewRiver Directors believe that the Combined Group could
deliver approximately £6.2 million of net pre-tax run-rate recurring annual
cost synergies.
The majority of the above cost synergies would be expected to be effective
shortly following completion of the Combination and it is expected that the
full benefit of the synergies would be unlocked within 12 months of completion
of the Combination on an annualised basis.
The identified cost savings would be contingent on the completion of the
Combination and would not be achieved by either NewRiver or Capital &
Regional independently. The estimated cost synergies referred to above reflect
both the beneficial elements and the relevant costs.
The NewRiver Directors have considered one-off costs in connection with
realising the expected cost synergies and estimated these to be approximately
£2.9 million, which would predominantly be incurred in the first 12 months
following completion. For the avoidance of doubt, this approximate £2.9
million is not factored into the £6.2 million of net pre-tax run-rate
recurring annual cost synergies referred to above.
These statements of estimated cost savings and synergies relate to future
actions or circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a consequence, in the event that any firm offer were to
be made and any Combination effected, the identified synergies and estimated
savings referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. For the purposes of Rule 28 of the Code, the statements of
estimated cost savings and synergies contained in this announcement are solely
the responsibility of NewRiver and the NewRiver Directors. Any statement of
intention, belief or expectation for the Combined Group following any
Combination becoming effective is also an intention, belief or expectation of
the NewRiver Directors and not of the Capital & Regional Directors.
These statements are not intended as a profit forecast and should not be
interpreted as such. No part of these statements, or this announcement
generally, should be construed or interpreted to mean that the Combined
Group's earnings in the first year following any Combination becoming
effective, or in any subsequent period, would necessarily match or be greater
than or be less than those of NewRiver and/or Capital & Regional for the
relevant preceding financial period or any other period.
Further information on the bases of belief supporting the Quantified Financial
Benefits Statement, including the principal assumptions and sources of
information, is set out below.
Bases of belief and principal assumptions
Following initial discussion regarding the Possible Offer, senior NewRiver
personnel have worked to identify, challenge, and quantify potential synergies
as well as the potential costs to achieve and timing of such synergies. The
assessment and quantification of potential synergies have been informed by
NewRiver's management's industry expertise and knowledge.
In preparing the Quantified Financial Benefits Statement, Capital &
Regional has shared certain operational and financial information to
facilitate a detailed analysis in support of evaluating the potential
synergies available from the creation of the Combined Group.
The NewRiver team has performed a bottom-up analysis of the costs included in
the Capital & Regional financial information and has sought to include in
the synergy analysis those costs which it believes will be either reduced or
eliminated as part of the Combined Group.
The cost bases used as the basis for the quantified financial benefits
exercise are the NewRiver full year expenses for the financial year ended 31
March 2024 and the Capital & Regional full year expenses for the year
ended 30 December 2023. The NewRiver Directors have, in addition, made the
following assumptions:
· The value of the Combined Group's property
portfolio remaining at or above the 30 June 2024 external valuation of c.
£0.9 billion (based on the property valuation reports for NewRiver prepared
by Knight Frank and Colliers, as set out in Parts A and B of Appendix 2 to
this announcement and the property valuation report for Capital & Regional
prepared by Knight Frank, as set out in Part C of Appendix 2 to this
announcement).
· NewRiver retains its status as a UK-REIT.
· There would be no material impact on the
underlying operations of either NewRiver or Capital & Regional or their
ability to continue to conduct their businesses after the de-duplication and
rationalisation of listing, administrative and operational expenses.
· There would be no material change to the
make-up of the Combined Group's portfolio for the purposes of this analysis.
· There would be no material change to
macroeconomic, political, regulatory or legal conditions in the markets or
regions in which NewRiver and Capital & Regional operate that will
materially impact on the implementation or costs to achieve the proposed cost
savings.
· There would be no change in tax legislation
or tax rates or other legislation in the UK that could materially impact the
ability to achieve any benefits.
Reports
As required by Rule 28.1(a) of the Code, BDO, as reporting accountant to
NewRiver, and Jefferies, as lead financial adviser to NewRiver, have provided
the opinions required under that Rule. Copies of these reports are included at
Parts B and C of this Appendix 3. Each of BDO and Jefferies has given and not
withdrawn its consent to the publication of its report in this announcement in
the form and context in which it is included.
These statements are not intended as a profit forecast and should not be
interpreted as such. These statements of estimated synergies relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a result, the estimated synergies referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. Neither the Quantified
Financial Benefits Statement nor any other statement in this announcement
should be construed as a profit forecast or interpreted to mean that
NewRiver's earnings in the first full year following any Combination becoming
effective, or in any subsequent period, will necessarily match or be greater
than or be less than those of NewRiver or Capital & Regional for the
relevant preceding financial period or any other period.
Due to the scale of the Combined Group, in the event that any firm offer is
made and any Combination becomes effective, there may be additional changes to
the Combined Group's operations. As a result, and given the fact that the
changes relate to the future, the resulting synergies may be materially
greater or less than those estimated.
Part B
REPORT FROM BDO ON NEWRIVER QUANTIFIED FINANCIAL BENEFITS STATEMENT
BDO LLP
55 Baker Street
London
W1U 7EU
The
Directors
18 September 2024
NewRiver REIT plc
89 Whitfield Street
London
W1T 4DE
Jefferies International Limited
100 Bishopsgate
London
EC2N
4JL
Dear Sir or Madam
NewRiver REIT plc (the "Company")
Possible offer for Capital & Regional plc (the "Target")
We report on the quantified financial benefits statement (the "Statement") by
the directors of the Company (the "Directors") included in Part A of Appendix
3 of the Rule 2.4 Announcement (the "Announcement") dated 18 September 2024 to
the effect that:
"The NewRiver Directors, having undertaken a review and analysis of the
potential cost savings of the Combined Group, as well as taking into account
factors they can influence, believe the Combined Group could deliver
shareholder value through the expected realisation of approximately £7.3
million of gross pre-tax run-rate recurring annual cost synergies. These would
be expected to be realised primarily from consolidation of:
· board, senior management, central and support
functions and savings related to Capital & Regional's status as a publicly
traded company (which would no longer be required on a standalone basis),
together with third party support, including professional advisory fees, which
would be expected to contribute approximately 85 per cent. (approximately
£6.2 million) of the gross pre-tax run-rate recurring annual cost synergies;
and
· head office and other operating infrastructure
such as technology and IT, which would be expected to contribute approximately
15 per cent. (approximately £1.1 million) of the gross pre-tax run-rate
recurring annual cost synergies.
Potential areas of dis-synergy have been considered by the NewRiver Directors,
with the principal area of dis-synergy being income generated from property
management services (equating to approximately £1.1 million per annum), which
is assumed to cease on completion of any Combination because Capital &
Regional provides these services to tenants but NewRiver would intend to align
this approach with its existing portfolio whereby these services are provided
by a third party specialist. Potential cost savings associated with the
outsourcing of these services have been reflected in the expected recurring
cost synergy figure.
Accordingly, the NewRiver Directors believe that the Combined Group could
deliver approximately £6.2 million of net pre-tax run-rate recurring annual
cost synergies.
The majority of the above cost synergies would be expected to be effective
shortly following completion of the Combination and it is expected that the
full benefit of the synergies would be unlocked within 12 months of completion
of the Combination on an annualised basis.
The identified cost savings would be contingent on the completion of the
Combination and would not be achieved by either NewRiver or Capital &
Regional independently. The estimated cost synergies referred to above reflect
both the beneficial elements and the relevant costs.
The NewRiver Directors have considered one-off costs in connection with
realising the expected cost synergies and estimated these to be approximately
£2.9 million, which would predominantly be incurred in the first 12 months
following completion. For the avoidance of doubt, this approximate £2.9
million is not factored into the £6.2 million of net pre-tax run-rate
recurring annual cost synergies referred to above.
These statements of estimated cost savings and synergies relate to future
actions or circumstances which, by their nature, involve risks, uncertainties
and contingencies. As a consequence, in the event that any firm offer were to
be made and any Combination effected, the identified synergies and estimated
savings referred to may not be achieved, may be achieved later or sooner than
estimated, or those achieved could be materially different from those
estimated. For the purposes of Rule 28 of the Code, the statements of
estimated cost savings and synergies contained in this announcement are solely
the responsibility of NewRiver and the NewRiver Directors. Any statement of
intention, belief or expectation for the Combined Group following any
Combination becoming effective is also an intention, belief or expectation of
the NewRiver Directors and not of the Capital & Regional Directors.
These statements are not intended as a profit forecast and should not be
interpreted as such. No part of these statements, or this announcement
generally, should be construed or interpreted to mean that the Combined
Group's earnings in the first year following any Combination becoming
effective, or in any subsequent period, would necessarily match or be greater
than or be less than those of NewRiver and/or Capital & Regional for the
relevant preceding financial period or any other period."
Opinion
In our opinion, the Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures in Part A of
Appendix 3 of the Announcement setting out the basis of the Directors' belief
(including the principal assumptions and sources of information supporting the
Statement and their analysis and explanation of the underlying constituent
elements).
This report is required by Rule 28.1(a) of the City Code on Takeovers and
Mergers (the "Code") and is given for the purpose of complying with that
requirement and for no other purpose.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in
accordance with the requirements of Rule 28 of the Code.
It is our responsibility to form our opinion, as required by Rule 28.1(a) of
the Code, as to whether the Statement has been properly compiled on the basis
stated and to report that opinion to you.
Save for any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in connection with this report or our statement, required by and
given solely for the purposes of complying with Rule 23.2 of the City Code,
consenting to its inclusion in the Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis stated in Part A of Appendix 3 of
the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for Investment
Reporting issued by the Financial Reporting Council ("FRC") in the United
Kingdom. We are independent in accordance with the FRC's Ethical Standard as
applied to Investment Circular Reporting Engagements, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
We have discussed the Statement, together with the basis of the Directors'
belief, with the Directors and Jefferies International Limited. Our work did
not involve any independent examination of any of the financial or other
information underlying the Statement.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Statement has been properly compiled on the basis stated.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in the United States of America or
other jurisdictions outside the United Kingdom and accordingly should not be
relied upon as if it had been carried out in accordance with those standards
and practices.
We do not express any opinion as to the achievability of the benefits
identified by the Directors in the Statement.
Since the Statement and the assumptions on which it is based relate to the
future and may therefore be affected by unforeseen events, we express no
opinion as to whether the actual benefits achieved will correspond to those
anticipated in the Statement and the differences may be material.
Yours faithfully
BDO LLP
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
Part C
REPORT FROM JEFFERIES ON NEWRIVER QUANTIFIED FINANCIAL BENEFITS STATEMENT
The Board of Directors
NewRiver REIT plc
89 Whitfield Street
London
W1T 4DE
18 September 2024
Dear NewRiver Directors
Quantified Financial Benefits Statement of NewRiver REIT plc ("NewRiver")
We refer to the Quantified Financial Benefits Statement, the bases of belief
thereof and the notes thereto (together, the "Statement") as set out in Part A
of Appendix 3 of the Rule 2.4 announcement dated 18 September 2024 (the
"Announcement"), for which the board of directors of NewRiver (the
"Directors") are solely responsible under Rule 28.3 of the UK City Code on
Takeovers and Mergers (the "Code").
We have discussed the Statement (including the assumptions, bases of
calculation and sources of information referred to therein) with the Directors
and those officers and employees of NewRiver who developed the underlying
plans as well as with BDO LLP ("BDO"). The Statement is subject to uncertainty
as described in the Announcement and our work did not involve an independent
examination of any of the financial or other information underlying the
Statement.
We have relied upon the accuracy and completeness of all the financial and
other information provided to us by or on behalf of NewRiver, or otherwise
discussed with or reviewed by us, and we have assumed such accuracy and
completeness for the purposes of providing this letter.
We do not express any view as to the achievability of the quantified financial
benefits identified by the Directors in the Statement or otherwise.
We have also reviewed the work carried out by BDO and have discussed with them
the opinion set out in Part B of Appendix 3 of the Announcement addressed to
you and us on this matter and the bases of calculation for the Statement.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of
the Code and for no other purpose. We accept no responsibility to NewRiver or
its shareholders or any person other than the Directors in respect of the
contents of this letter. We are acting exclusively as financial advisers to
NewRiver and no one else in connection with the offer by NewRiver for Capital
& Regional referred to in the Announcement and it was for the purpose of
complying with Rule 28.1(a)(ii) of the Code that NewRiver requested Jefferies
International Limited to prepare this report on the Statement. No person other
than the Directors can rely on the contents of this letter, and to the fullest
extent permitted by law, we exclude all liability (whether in contract, tort
or otherwise) to any other person, in respect of this letter, its contents or
the work undertaken in connection with this letter or any of the results that
can be derived from this letter or any written or oral information provided in
connection with this letter, and any such liability is expressly disclaimed
except to the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you
as the Directors are solely responsible for purposes of Rule 28 of the Code,
has been prepared with due care and consideration.
Yours faithfully,
Jefferies International Limited
4 appendix 4
COMBINED GROUP DEBT POSITION
NewRiver Capital & Regional Combined Group(4)
Gross debt £304 million £199 million £444 million
Undrawn facilities £100 million £0 million £100 million
Average cost of debt(1) 3.5% 4.3% 3.5%
Fixed or hedged(1) 100% 98% 100%
Unsecured(1) 100% 0% 68%
Weighted average maturity(1) 3.7 years 2.4 years 3.3 years
ICR(2) 6.3x 3.6x 4.5x
Net debt/EBITDA 5.1x 7.2x 5.9x-6.0x
LTV(3) 31% 46% 42-43%
Notes:
1. Excludes £4 million of debt related to associates.
2. Calculated by comparing actual net property income received versus net
cash interest payable on a 12 month look back basis.
3. Computed as net debt divided by Gross Asset Value (GAV).
4. Adjusted for the cash component of the consideration payable pursuant
to the Combination, estimated transaction costs, estimated net proceeds of the
Placing, the repayment of three Capital & Regional secured loan facilities
totalling £59 million and net pre-tax run-rate recurring annual cost
synergies of £6.2 million.
5 appendix 5
ADDITIONAL COMBINED GROUP PORTFOLIO INFORMATION
As at 30 June 2024(1) NewRiver Capital & Regional Combined Group
Portfolio Valuation (GAV) £539 million(2) £350 million(3) £889 million(4)
Contracted Rent £52 million £38 million £90 million
Net Initial Yield (%) 7.3 7.7 7.4
Equivalent Yield (%) 8.6 8.4 8.5
Assets 41 6 47
Notes:
1. All figures in table are approximate.
2. Based on the property valuation reports for NewRiver prepared by Knight
Frank and Colliers, as set out in Parts A and B of Appendix 2 to this
announcement.
3. Based on the property valuation report for Capital & Regional
prepared by Knight Frank, as set out in Part C of Appendix 2 to this
announcement.
4. Based on the property valuation reports for each of NewRiver and
Capital & Regional prepared by Knight Frank and Colliers, as set out in
Parts A, B and C of Appendix 2 to this announcement.
6 appendix 6
TOP 5 TENANTS INFORMATION
Tenant NewRiver Capital & Regional Combined Group
Tenant % of rent Tenant % of rent Tenant % of rent
Tenant 1 Poundland 3.3% Boots 5.4% Boots 3.7%
Tenant 2 B&M 2.9% TK Maxx 3.1% TK Maxx 2.4%
Tenant 3 Boots 2.4% Next 2.5% B&M 2.3%
Tenant 4 M&S 2.4% Primark 2.2% Poundland 2.1%
Tenant 5 Iceland 2.1% H&M 2.2% Superdrug 1.9%
7 appendix 7
DEFINITIONS
The following definitions apply throughout this announcement unless the
context requires otherwise:
BDO BDO LLP, a limited liability partnership registered in England and Wales (with
registered number OC305127);
Business Day any day (excluding any Saturday or Sunday or any public holiday in England and
Wales and South Africa) on which banks in the City of London and Johannesburg
are generally open for business;
Capital & Regional Capital & Regional plc, a public limited company incorporated in England
and Wales with company number 01399411 and whose registered office is at
138-142 Strand, Strand Bridge House, London WC2R 1HH;
Capital & Regional Additional Distribution has the meaning given to it in paragraph 2 of this announcement;
Capital & Regional Additional Dividend has the meaning given to it in paragraph 2 of this announcement;
Capital & Regional Board the board of Capital & Regional Directors as at the date of this
announcement or, where the context so requires, the board of Capital &
Regional Directors from time to time;
Court Meeting the meeting of Capital & Regional Shareholders to be convened by order of
the Court pursuant to section 896 of the Companies Act for the purpose of
considering and, if thought fit, approving the Scheme (with or without
amendment) and any adjournment thereof;
Capital & Regional Directors the directors of Capital & Regional as at the date of this announcement
or, where the context so requires, the directors of Capital & Regional
from time to time;
Capital & Regional General Meeting the Capital & Regional General Meeting of Capital & Regional
Shareholders to be convened in connection with the Scheme to consider and, if
thought fit, to approve the Capital & Regional Resolution(s) (with or
without amendment), including any adjournment, postponement or reconvening
thereof;
Capital & Regional Group Capital & Regional and its subsidiaries and subsidiary undertakings from
time to time;
Capital & Regional Interim Dividend has the meaning given to it in paragraph 2 of this announcement;
Capital & Regional Meetings the Court Meeting and the Capital & Regional General Meeting;
Capital & Regional Resolution(s) the resolution(s) to be proposed at the Capital & Regional General Meeting
necessary to approve and implement the Scheme, including a resolution
authorising the Capital & Regional Board to take all actions as it may
consider necessary or appropriate to give effect to the Scheme, a resolution
to amend the Articles by the adoption and inclusion of a new article under
which any Capital & Regional Shares issued or transferred after the Scheme
Record Time (other than to NewRiver and/or its nominees) shall be
automatically transferred to NewRiver (and, where applicable, for
consideration to be paid to the transferee or to the original recipient of the
Capital & Regional Shares so transferred or issued) on the same terms as
the Combination (other than terms as to timings and formalities);
Capital & Regional Shareholders the registered holders of Capital & Regional Shares from time to time;
Capital & Regional Share Award an option to acquire Capital & Regional Shares granted pursuant to the
Capital & Regional Share Plans;
Capital & Regional Share Plans (a) the Capital & Regional plc 2018 Long Term Incentive
Plan; and
(b) the Capital & Regional plc Combined Incentive Plan;
Capital & Regional Shares the ordinary shares of 10 pence each in the capital of Capital & Regional
from time to time;
CBRE CBRE Limited;
Closing Price the closing middle market price of a share as derived from the Daily Official
List on any particular date;
Code the City Code on Takeovers and Mergers, as issued from time to time by or on
behalf of the Panel;
Colliers Colliers International Property Consultants Limited;
Combination in the event that NewRiver announces an intention to make a firm offer for
Capital & Regional under Rule 2.7 of the Code, the proposed acquisition of
the entire issued and to be issued ordinary share capital of Capital &
Regional by NewRiver to be implemented by way of the Scheme or, should
NewRiver so elect (with the consent of the Panel) by way of the Takeover
Offer, and, where the context admits, any subsequent revision, variation,
extension or renewal thereof;
Combined Group the NewRiver Group as enlarged by the Capital & Regional Group following
completion of any Combination;
Companies Act the Companies Act 2006, as amended from time to time;
Conditions has the meaning given to it in paragraph 13 of this announcement;
Court the High Court of Justice in England and Wales;
Daily Official List the daily official list of the London Stock Exchange;
Dealing Disclosure an announcement pursuant to Rule 8 of the Code containing details of dealings
in interests in relevant securities of a party to an offer;
Deutsche Numis Numis Securities Limited, joint financial adviser and joint corporate broker
to Capital & Regional;
effective either:
(a) if any Combination is implemented by way of the Scheme,
the Scheme having become effective pursuant to its terms; or
(b) if any Combination is implemented by way of a Takeover
Offer, the Takeover Offer having been declared, or having become,
unconditional in accordance with the requirements of the Code;
FCA the Financial Conduct Authority;
FSMA the Financial Services and Markets Act 2000, as amended from time to time;
Growthpoint Growthpoint Properties Limited;
ICR interest cover ratio;
Independent Capital & Regional Directors the Capital & Regional Directors other than Norbert Leon Sasse and
Panayiotis (Panico) Theocharides;
Initial Rule 2.4 Announcement the announcement made by Capital & Regional on 23 May 2024 relating to a
possible offer by, amongst others, NewRiver for Capital & Regional in
accordance with Rule 2.4 of the Code;
ISIN the International Securities Identification Number;
Jefferies Jefferies International Limited, lead financial adviser, and joint corporate
broker to NewRiver;
Johannesburg Stock Exchange or JSE The JSE Limited, a public company incorporated in accordance with the laws of
South Africa and licensed as an exchange under the South African Financial
Markets Act, 19 of 2012, or the securities exchange operated by JSE Limited,
as the context indicates;
Joint Brokers Panmure Liberum, Jefferies and Shore Capital;
Kinmont Kinmont Limited, joint financial adviser to NewRiver;
Knight Frank Knight Frank LLP;
Last Practicable Date close of business on 17 September 2024, being the last Business Day
immediately prior to the date of this announcement;
London Stock Exchange London Stock Exchange plc;
LTV loan-to-value: the outstanding amount of a loan as a percentage of property
value;
Main Market the London Stock Exchange's main market for listed securities;
Market Abuse Regulation Regulation (EU) No 596/2014 and the delegated acts, implementing acts,
technical standards and guidelines thereunder as it forms part of domestic law
of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018,
as amended from time to time;
New NewRiver Shares the NewRiver Shares proposed to be allotted and issued to Capital &
Regional Shareholders in connection with any Combination under the Possible
Offer Terms;
NewRiver NewRiver REIT plc, a public limited company incorporated in England and Wales
with company number 10221027 and whose registered office is at 89 Whitfield
Street, London W1T 4DE;
NewRiver Board the board of directors of NewRiver as at the date of this announcement or,
where the context so requires, the board of directors of NewRiver from time to
time;
NewRiver Combination Resolution(s) the shareholder resolution(s) to be proposed at the NewRiver General Meeting
to grant authority to the NewRiver Directors to allot New NewRiver Shares in
connection with any Combination;
NewRiver Directors the directors of NewRiver as at the date of this announcement or, where the
context so requires, the directors of NewRiver from time to time;
NewRiver General Meeting the general meeting of NewRiver to be convened by the NewRiver Board in
connection with the passing of the NewRiver Combination Resolution(s);
NewRiver Group NewRiver and its subsidiaries and subsidiary undertakings from time to time;
NewRiver Interim Dividend has the meaning given to it in paragraph 2 of this announcement;
NewRiver Shareholders the holders of NewRiver Shares;
NewRiver Shares the ordinary shares of one pence each in the capital of NewRiver;
Offer Document if (with the consent of the Panel, as applicable) NewRiver elects to implement
any Combination by way of a Takeover Offer, the document to be sent to Capital
& Regional Shareholders which will contain, inter alia, the terms and
conditions of the Takeover Offer;
Offer Period the offer period (as defined in the Code) relating to Capital & Regional
commencing on 23 May 2024 and ending on the earlier of the date on which any
Combination becomes effective and/or the date on which the Scheme lapses or is
withdrawn (or such other date as the Panel may decide);
Offer Period Last Practicable Date close of business on 22 May 2024, being the last Business Day immediately
prior to the date of the Initial Rule 2.4 Announcement;
Official List the Official List of the FCA;
Panmure Liberum Panmure Liberum Limited, sole sponsor and joint corporate broker to NewRiver;
Placing the placing of new NewRiver Shares to be announced on or around 18 September
2024;
Placing Launch Announcement the announcement launching the Placing expected to be released immediately
following this announcement;
Quantified Financial Benefits Statement the statements of estimated cost savings and synergies arising out of any
Combination set out in Appendix 3 to this announcement;
Panel the UK Panel on Takeovers and Mergers;
Registrar of Companies the Registrar of Companies in England and Wales;
REIT a real estate investment trust, being a company or group to which Part 12 of
the CTA 2010 applies (including, where relevant, a REIT Group);
Restricted Jurisdiction any jurisdiction into which, or from which, sending any documents in
connection with the Possible Offer and/or making any firm offer, or any
information relating to any firm offer and/or any Combination, available would
violate the local laws or regulations of that jurisdiction resulting in a
significant risk of civil, regulatory or criminal exposure;
Scheme a scheme of arrangement under Part 26 of the Companies Act to implement any
Combination, with or subject to any modification, addition or condition
approved or imposed by the Court and agreed to by Capital & Regional and
NewRiver;
Scheme Court Order the order of the Court sanctioning the Scheme under section 899 of the
Companies Act;
Scheme Document the document to be dispatched to Capital & Regional Shareholders including
the particulars required by section 897 of the Companies Act in connection
with the Scheme;
Scheme Record Time has the meaning given to it in paragraph 2 of this announcement;
Shore Capital Shore Capital Stockbrokers Limited, joint corporate broker to NewRiver;
South Africa the Republic of South Africa;
South African Register the branch register of Capital & Regional Shareholders maintained by or on
behalf of Capital & Regional pursuant to its secondary listing on the JSE;
Stifel Stifel Nicolaus Europe Limited, joint financial adviser and joint corporate
broker to Capital & Regional;
Takeover Offer if (with the consent of the Panel as applicable) NewRiver elects to implement
any Combination by way of a takeover offer as defined in Chapter 3 of Part 28
of the Companies Act, the offer to be made by or on behalf of NewRiver to
acquire the entire issued and to be issued ordinary share capital of Capital
& Regional and, where the context admits, any subsequent revision,
variation, extension or renewal of such offer;
UFFO underlying funds from operations;
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland; and
UK Listing Rules the UK listing rules, made by the FCA under Part 6 of FSMA, as amended from
time to time, and the UK Listing Rules Instrument 2024 (FCA 2024/23).
All references to time in this announcement are to London time unless
otherwise stated.
All references to "pounds", "pounds Sterling", "Sterling", "£", "pence",
"penny" and "p" are to the lawful currency of the United Kingdom.
All references to "South African Rand" are to the lawful currency of South
Africa.
A reference to "includes" shall mean "includes without limitation", and
references to "including" and any other similar term shall be construed
accordingly.
For the purposes of this announcement, "subsidiary", "subsidiary undertaking",
"undertaking" and "equity share capital" have the meanings given by the
Companies Act.
References to an enactment include references to that enactment as amended,
replaced, consolidated or re-enacted by or under any other enactment before or
after the date of this announcement.
References to the singular include the plural and vice versa.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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