RNS Number : 9157K
Capital & Regional plc
13 July 2017
 

13 July 2017

Capital & Regional plc

("Capital & Regional" or the "Company" or "Group")

Trading Update

Capital & Regional plc, the UK focused retail property REIT, specialising in dominant community centres, today announces a trading update for the first half of 2017, prior to its half year results announcement which will follow on 10 August 2017. 

Operating highlights1

Continued growth in rental income with further capex driven gains expected in H2

·   Like-for-like2 Passing Rent was £53.9 million at 30 June 2017, up £0.9 million or 1.7% from 31 December 2016.  £1.1 million of additional annual rent is due to come on stream in the next month, when new major units for Lidl and The Gym in Walthamstow as well as the Travelodge at Wood Green are handed over, providing further evidence of the growth in income driven by our accretive capex programme and specialist asset management platform.

·    Total Passing Rent at 30 June 2017 was £59.9 million benefitting also from the acquisition of The Exchange Centre, Ilford that completed in March 2017. 

Strong occupier demand driving rents, occupancy and supporting visitor numbers

·   Occupancy remained high at 95.5% at 30 June 2017, marginally ahead of December 2016 (95.4%). 

·    Strong occupier demand for our town centre locations, with high footfall and affordable rents, led to 22 new lettings and 12 lease renewals in the first half of the year totalling £2.0 million in contracted income, at a combined premium to ERV3 of 8.4%, equating to an uplift on the previous passing rent3 of 21%. 

·     Notable lettings in the period include Lidl and Smiggle in Walthamstow; Superdrug in Maidstone; Five Guys in Wood Green; and Scotts, Kiko and KFC in Luton.  The former BHS stores in Blackburn and Redditch were handed over to Wilko and The Range respectively and, as noted, our construction programmes to create space for Lidl, The Gym and Travelodge at Walthamstow and Wood Green are approaching completion. 

·    There were 35.4 million shopper visits to our centres in the first half of the year representing a modest 0.9% fall on a like-for-like4 basis, outperforming the national index which was -2.7%.  Our C&R Trade Index showed retailers' sales up 0.3% for our schemes for the six months, with the month of June up 1.7%.   

·    Car park usage has been stable and car park income at £4.7 million is up 11% on a like-for-like2 basis.  We have continued to expand the Collect Plus service with over 20,000 parcels handled in the period, an increase of 34% year on year.   

Continued progress with major portfolio asset management strategies

·     In Walthamstow, we achieved a key milestone, in submitting the planning application for our combined proposals to deliver a 90,000 sq ft retail and leisure extension and 470 residential units. A positive decision is anticipated later this year. 

·     In Hemel Hempstead, we have commenced the first stage of our repositioning strategy, with a positive public consultation on our proposals to create a town centre leisure hub anchored by a cinema, for which heads of terms have been agreed with a leading operator.  Launch of a formal planning application will follow shortly.

Property valuations

Robust valuations reflecting the defensive characteristics of our portfolio

·     The valuation of the wholly-owned portfolio at 30 June 2017 was £879.8 million, reflecting a net initial yield of 5.97%.  This is in line with the 30 December 2016 valuation of £794.1 million after allowing for capital expenditure in the period of £7.7 million and the £78.0 million acquisition of The Exchange Centre, Ilford in March 2017, excluding acquisition costs of c £1.0 million.   

Lawrence Hutchings, Chief Executive, commented:

"Whilst only my fifth week in the business I take much encouragement from the clear evidence that this update provides of the quality of our portfolio, with its London and South-East bias, and consisting of assets which primarily cater for the non-discretionary and value-orientated needs of our shoppers.  Furthermore, it demonstrates the improvements that our team of experienced professionals is capable of delivering through our focussed and active asset management programme.  Our income has remained robust with further asset management driven gains expected to come on stream in the second half, despite the current uncertain macro-economic backdrop and the continuing structural changes taking place in retailing. 

"We expect the pace of investment in our portfolio to increase in the second half of the year as we progress the active repositioning and improvements in customer proposition in our centres, together with further significant milestones on major transformational initiatives at Ilford, Hemel Hempstead and Walthamstow.  This will continue to fuel enhanced income growth while further underpinning the strong footfall and convenience credentials of our assets. 

"The successful delivery of our £80 million accretive capital expenditure programme, allied to an enhanced focus on improving the efficiency of our operations, provides a strong platform for the development and growth of the business in the coming years."

 

1 Wholly-owned portfolio unless otherwise stated.

2 Like for like excludes the impact of property acquisitions or sales in the period.  For the six months to 30 June 2017 the wholly-owned figures on a like-for-like basis therefore exclude the impact of the acquisition of The Exchange Centre, Ilford.

3 For lettings and renewals (excluding development deals) with a term of five years or longer and which did not include a turnover element.

4 Like for like excluding The Exchange Centre, Ilford and entrances impacted by development work.

 

 

- ENDS -

 

For further information:

Capital & Regional plc                  020 7932 8000

Lawrence Hutchings

Charles Staveley

 

FTI Consulting                               020 3727 1000

Richard Sunderland                        

Claire Turvey

capreg@fticonsulting.com

 

About Capital & Regional plc

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering significant value enhancing retail and leisure asset management opportunities across its c. £1 billion portfolio of in-town, dominant community shopping centres.

 

Capital & Regional owns seven shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch. Capital & Regional manages these assets through its in-house expert property and asset management platform.

 

For further information see capreg.com.

 

Forward Looking Statements

This document contains certain statements that are neither reported financial results nor other historical information.  These statements are forward-looking in nature and are subject to risks and uncertainties.  Actual future results may differ materially from those expressed in or implied by these statements.  Many of these risks and uncertainties relate to factors that are beyond Capital & Regional's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis.  Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this document.  Capital & Regional does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document.  Information contained in this document relating to the Group should not be relied upon as a guide to future performance.

 


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