Capital & Regional confirms Great Northern offer
PROPERTY giant Capital & Regional has confirmed it is in talks with a potential buyer for its Great Northern leisure and office complex in Manchester city centre.
The 450,000 sq ft complex, whose current tenants include AMC Cinemas, Virgin Leisure and the Manchester 235 casino, has been on the market for two-and-half years.
Last year a £75m sale to Manchester City Council was close, but these discussions eventually fell apart.
However, reports linking the building to privately-owned Manchester property giant Bruntwood resurfaced in June.
Speaking as it announced half-yearly results this morning which showed that it made a profit of £13m in the six months to June 30, compared with a loss of £131m last year, the company said that it had received approaches for the Great Northern building, which were “under consideration”.
Great Northern is one of a small number of properties which remain wholly-owned by Capital and Regional, with most of the others it controls based in funds.
The value of this wholly-owned portfolio remained unchanged at around £81m. However, Capital & Regional said it had used rents collected at this portfolio to pay down a portion of the debt it owes through the purchase of Great Northern, which now stands at £64.3m.
The retail property giant also confirmed that the sale of the Manchester Evening News arena – a joint venture it owned alongside GE Commercial Finance – completed in June for £62.2m, which has allowed it to repay an off-balance sheet loan of £47.8m.
Its sale was part of a programme of disposals of properties valued at £378m during the first half, although the group’s share of this equated to £80m.
“The group has taken significant steps further to strengthen its financial position in the first half of the year,” said Capital & Regional chairman John Clare.
“Disposals at both Group and Fund level have helped to de-gear the balance sheet.”
By the end of the period, Capital & Regional’s net debt stood at £48m – down from £115m a year ago and £63m at the end of 2009.
Moreover, the firm announced that it had restructured its bond financing arrangements for its main shopping centre fund, The Mall, which recently put on a 200,000 sq ft extension to its Blackburn Shopping Centre. The maturity dates for its bonds were extended until 2015 and the fund’s lifespan was extended until 2017.
Mr Clare said that the refinancing provided “a solid foundation” for its management team to move the fund forwards.
In the first half of the year, The Mall fund’s valuation increased by 3% and it sold off more than £200m worth of assets, including its Preston shopping centre in March for £87m, reflecting a net initial yield of 7.6%.
“I look forward to the group playing to its strengths as an entrepreneurial specialist property company with a track record in exploiting asset management opportunities in retail and other related sectors of the property market,” said Mr Clare.
