Liberty Int anounces demerger

Johannesburg - UK real estate investment trust Liberty International [JSE:LBT] plc announced on Tuesday that it intends to separate into two businesses - Capital Shopping Centres and Capital & Counties.

It said the separation will be effected by way of a demerger of Liberty International's central London focused property investment and development division, to a new company called Capital & Counties Properties PLC (Capital & Counties), from the rest of the Liberty International Group comprising predominantly the UK shopping centres business.

Liberty International, which will retain its UK regional shopping centre assets, along with its US assets and Indian investments, will be renamed Capital Shopping Centres Group PLC (Capital Shopping Centres).

"The demerger will create distinct entities with separate strategic, capital and economic characteristics and management teams: Capital Shopping Centres, a prime regional shopping centre focused UK REIT, aiming to deliver strong long-term returns through income and capital growth; and Capital & Counties, a central London focused, non-REIT, property company focusing on total return opportunities in London's real estate market," the group, which is also listed in South Africa, said.

Earlier, the group reported adjusted earnings per share of 18.3 pence for the year ended December versus 29 pence the previous year.

The total dividend per share, which includes the proposed final dividend, was unchanged at 16.5 pence.

Patrick Burgess, chairperson of Liberty International, commented: "The group is in a substantially stronger financial position than twelve months ago with the loan to value ratio reduced from 58% to 51% and with cash balances of £583m and undrawn committed facilities of £248m.

"After two difficult years in the UK property industry, the group has considerable recovery prospects. The directors therefore face the future with a measure of confidence," he added.

"The Capital & Counties business has become an attractive central London focused business concentrated on three landmark estates including Covent Garden and Earls Court & Olympia. This business has been almost entirely created in the last five years with the active involvement of its current management team through much of that period.

"Capital Shopping Centres is a market leader in the UK regional shopping centre business embracing the highest quality centres with a senior management team whose worth has been proven through several economic cycles.

"Retail trade in the UK continues to gravitate towards the strongest destinations, the supply pipeline of new retail space has sharply diminished, and this is greatly to the benefit of existing centres.

"The board believes that the demerger announced today into two distinct focused businesses will enable Capital Shopping Centres and Capital & Counties each to achieve their full potential over a period of time," Burgess stated.

- I-Net Bridge