IN AN effort to improve its financing flexibility by diversifying its funding sources, the UK’s largest shopping mall owner, Capital Shopping Centres, on Thursday announced the launch of an offering of £300m of senior, unsecured convertible bonds due 2018, with an option to increase the offering by an additional £50m.
The company, which was unbundled from Liberty International in 2010, said it would use the net proceeds of the offering to refinance short-term borrowings, including those relating to its recent acquisitions of the Broadmarsh Centre in Nottingham, and properties adjacent to its existing centres.
The properties adjacent to existing centres provide the company with additional development opportunities, such as King George V Dock and Centaurus Retail Park; and position CSC to advance its development pipeline and make further acquisitions.
CSC said it had continued to focus on positioning its assets for longer-term organic growth through active management projects and extensions.
Since the interim results in July, CSC has obtained planning permission for a 325,000-square-foot extension at Lakeside, Thurrock, and acquired a 17 acre site adjacent to Metrocentre, Gateshead, for £3m.
In addition to the proposed convertible bond financing, CSC said it continued to review further options for financing the long-term growth plans of the business.
"One such attractive route, which CSC is actively considering, is the introduction of equity partners into major assets, with wholly owned assets, mostly freehold, making up 75% of its investment properties by value," the company said in a statement.
CSC has a £1bn, 10-year pipeline of projects including major extensions and active management initiatives.
The company, which has a significant 35% South African shareholding, is also banking on the fact that it has plenty of organic growth in the business and it does not have to go out and find land and new assets. Instead it can make existing centres stronger by enhancing customer experience by adding more food, beverage, restaurant and leisure offerings.
CSC owns 14 UK shopping centres, including 10 of the top 25 and four of the top six out-of-town shopping centres.