Speciality joins market and buys centre

SPECIALITY Shops, a company that aims to make town centre shopping centres more attractive places to spend money, is coming to the market via a pounds 10.6m placing.

The deal is accompanied by the acquisition of Jackson Square, a shopping centre in Bishop's Stortford, Hertfordshire, from PosTel for pounds 12.5m - pounds 8m in shares and the remainder in cash. The acquisition will leave PostTel with a 28 per cent stake in the group.

Speciality Shops was established eight years ago by David Houghton and Steven Jaffe, with pounds 15m backing from institutions including London & Manchester.

The aim was to improve the value of shopping centres by managing them more actively than traditional institutions.

Since then, Speciality Shops has acquired four shopping centres - in Edinburgh, Maidstone, Leeds and Cheltenham - and is now looking for funds to expand its operations.

Mr Jaffe pointed to the group's success with the Waverley market in Edinburgh, where the centre's rental income has risen by 72 per cent and its capital value by 42 per cent since Speciality Shops took it over in November 1989.

The shares are being placed at 130p a share, an 8 per cent discount to its pro forma net asset value, giving the group a market capitalisation of pounds 28.7m. Dealings start on Friday.

The placing will cut the group's gearing to about 60 per cent of net assets. Mr Jaffe said the company would be prepared to increase that to between 100 and 110 per cent for acquisitions, and said it was looking seriously at four possibilities.

Speciality Shops is also talking to institutions about managing shopping centres on their behalf.