CSC revises Trafford Centre bid terms

CAPITAL Shopping Centres (CSC) has issued revised terms of its proposed acquisition of the Trafford Centre from the Peel Group.

Under the new deal the shares issued to Peel have been re-priced from 368p to 400p after CSC said it had identified “significant incremental value opportunities” that imply a potential net asset value (NAV) of 536p per share.

This will reduce the shares available to Peel from 224.1 million to 205.9 million, taking its proposed holding in the group from 24.7% to 23.2%. The value of the deal remains at £1.6bn.

CSC has been under pressure from the US-based Simon Property Group, which holds 5%, who said the original deal did not represent value for shareholders.

Simon has since put forward an indicative takeover proposal at 425p a share, valuing CSC at just under £3bn. It has been given until 5pm on January 12 to launch a formal bid.

CSC said Simon’s proposal “very substantially undervalues” the business. It believes the NAV of 536p a share could be boosted by a further 89p to 625p following a report by DTZ which identified further value in the group’s portfolio.

“CSC is poised for net rental income (NRI) recovery which is the key driver of growth in earnings and dividends. The company has substantial reversionary potential with the current independent valuers’ estimated rental value (ERV) of £355m compared to a passing rent and other income of £289m,” said the company.

In a statement Peel’s chairman John Whittaker said: “CSC has 13 prime UK shopping centres with considerable untapped growth opportunities. I believe the existing NAV of CSC does not reflect the latent value that can be unlocked through, amongst other things, improving rental income, increasing square footage and adding leisure, catering and focus on customer ambience.

“The re-pricing of this transaction reflects my strong belief in the growth yet to come at CSC. By combining the extensive experience of the Peel and CSC teams in managing UK regional shopping centres we believe CSC will be well placed to realise this potential.”