New Frontier Properties sells asset to repay debt
UK landlord raises R246m from the sale of a shopping centre in Middlesbrough
UK landlord New Frontier Properties (NFP) has sold the Cleveland Shopping Centre in Middlesbrough for £12m (R246m) to the Middlesbrough council to repay some of its debt.
NFP, which was suspended from the JSE and Stock Exchange of Mauritius (SEM) in December after the late publication of its financial statements, gives SA investors exposure to UK real estate.
In a Sens statement on Wednesday, NFP said the proceeds of the sale of the shopping centre will be used to pay part of its loan from HSBC Bank, which had expired and is being rolled from month to month.
In the last annual results published in 2019, its net worth was £44.2m, reflecting a decline in property valuations. At the time its assets were valued at £119m. The company, which did not declare a dividend during this period, said it was looking for new investors to finance the business after the departure of its major shareholder, Rebosis Property Fund, which was founded by Sisa Ngebulana.
Rebosis sold its 49.35% stake (which it bought in 2015) for R700m. Ngebulana resigned from the NFP board following the sale of Rebosis’s shares. A number of NFP directors have since resigned.
In December, NFP said it was operating with four directors — two Mauritians (non-executives) and two UK executive directors from NFP asset managers.
Subsequent company announcements have highlighted the loss of control to HSBC over its two remaining retail assets in Burton upon Trent and Middlesbrough. The company will sell what’s left of the assets on behalf of the funder to meet some of its debt commitment.
NFP said in its Sens statement: “Shareholders are advised that the company still does not have control over its properties as announced regularly on Sens and the asset manager will continue to sell the remaining property, and the disposal will similarly be without the required JSE and shareholder approval, which will result in a breach of the JSE listings requirements. Shareholders are advised that the current carrying value of the remaining shopping centre is ... below the remaining loan amount.”
However, the transaction requires approval from shareholders by means of an ordinary resolution in a general meeting, said the company.
The bank required the sale of the shopping centre to recover its loan to the company. As of August 31 2021, the Cleveland Shopping Centre was valued at £15m, and the HSBC loan was £27.8m, representing a negative net asset value of £12.8m, with the centre’s profit after tax at £600,000. NFP said the net effect will improve its net asset value, since the HSBC loan has no recourse to the company.
Trading suspension
NFP has a primary listing on the SEM and the Alternative Exchange of the JSE, and was suspended from both on December 20 for the late publication of its 2020 annual results.
The SEM granted NFP an extension until June 30 to publish and file the relevant financial information, failing which a termination of the listing may be considered by the SEM.
NFP will become compliant with the SEM’s rules and JSE listings requirements once the 2020 and 2021 results have been issued and published. The company will then apply to the SEM and JSE for the lifting of the suspension in trade in its securities.