LONDON (ShareCast) - (Sharecast News) - NewRiver REIT confirmed plans to repurchase up to 47.7 million shares from Growthpoint Properties at 75p each on Wednesday, alongside a secondary placing of the South African investor's stake.
Growthpoint, which holds around 67.4 million NewRiver shares, or 14.2% of the company, launched an accelerated bookbuild to sell at least 47.7 million shares to institutional investors.

NewRiver said it intended to buy back the same number of shares from Growthpoint, cancelling them under its market purchase authority.

The London-listed real estate investment trust said the move followed the £58.8m sale of Abbey Centre in Northern Ireland in June and offered an opportunity to reinvest proceeds at a significant discount to net asset value.

It said it expected the buyback to be immediately accretive, increasing net tangible assets per share by about 4% and underlying funds from operations per share by about 3% on an annualised basis.

NewRiver's loan-to-value ratio stood at 38% at the end of June, down from 42% at the end of March following the Abbey Centre disposal.

The buyback could temporarily push the loan-to-value around four percentage points higher, above the company's medium-term target of under 40%, but NewRiver said it remained committed to returning within guidance through future disposals.

"The current share price materially undervalues the company, and the board is of the view that the proposed buyback is an attractive allocation of capital that will be immediately accretive," NewRiver said.

Panmure Liberum was acting as sole bookrunner for the placing.

At 1125 BST, shares in NewRiver REIT were up 5.21% at 73.96p.

Reporting by Josh White for Sharecast.com.

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