Capital and Regional holds up in tough environment

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Capital and Regional holds up in tough environment

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Published Date: 2019-08-05 | Source: Stephen Gunnion | Author: Stephen Gunnion

Capital and Regional holds up in tough environment

The shopping centre owner says its focus on community centres has helped it weather slower consumer spending and structural changes in the retail sector.

Capital & Regional has bucked the trend in the strained UK retail sector, with a solid operational performance for the first half of its financial year. The regional shopping centre owner attributes its resilience to its focus on community centres, which provide non-discretionary and needs based products and services. It says these are best placed to counter the effects of structural changes in the retail sector and slowing consumer spending.

In a trading update, the group said occupancy levels remained high at 96.8% in the six months to end-June as it concluded 44 new lettings and renewals totalling £3.1 million in rental income. Contracted rent declined by 1.9% to £61.1 as new letting activity offset the impact of retailers entering company voluntary arrangements (CVAs) and administrations. Like-for-like rental income for the period fell 3.1% to £25.2 million, including a £1.1 million, or 4.2%, impact from CVAs and retailer restructurings.

Footfall at its centres outperformed the national index with its three London centres increasing by 0.6%. Across its wider portfolio, there were 37.2 million visits, reflecting a decline of 1.8% against the national index decline of 3.6%.

However, like other shopping centre owners, including intu and Hammerson, its malls are worth less than they were a year ago due to pressure on the sector. Its portfolio valuations fell by 6.8% to £797.3 million, reflecting an 11% reduction in regional asset values and a 3% reduction in the three London centres.

It said it had agreed the sale of non-core land at Wood Green in London for £5 million, in line with the book value. It expects to receive the proceeds in the last quarter of the year.

I am pleased that the drive and energy of our team has enabled us to present a robust set of operational results in what has been a challenging period for UK retail," chief executive Lawrence Hutchings said. "Our London weighting together with affordable rents, averaging £15 psf (per square foot), are a key advantage and this provides a base for us to remerchandise our centres assertively as the leasing performance indicates."

Meanwhile, the group said first stores at its Walthamstow shopping centre in London had reopened following a fire late last month. Up to 75% of the shops would be reopened over the coming weeks, with the remaining areas expected to re-open progressively over the next six to nine months. It said it was fully insured for both reinstatement and loss of income.

Its shares closed 4.7% higher at R2.88 on Friday.




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