C&R reports on robust trading

By Paul Norman - Wednesday, January 11, 2017 8:56

Capital & Regional, the UK focused specialist property REIT, said in its trading update for the second half of 2016 that its schemes has enjoyed a strong Christmas trading period following a period that saw strong leasing, portfolio gains and a major refinancing that locked in long-term financing at low pricing.

C&R said in the update which omes prior to its year end results on 9 March 2017 that its schemes enjoyed a good Christmas with like-for-like footfall over the last two weeks of the year up 2.2% on the prior year.

Footfall improved in the second half of 2016 and for the whole of 2016 the portfolio outperformed the industry benchmark, by 1.9%.

C&R said there has been "continued good momentum in leasing activity in the second half of 2016 with 34 new lettings and 15 lease renewals totalling £2.8m in annual rental income, at a combined 6.1% premium to ERV.

Key lettings in the period include Burger King, Footasylum and Wilko at Blackburn; Card Factory and an upsized JD Sports at Luton; The Gym at Walthamstow; Foot Locker at Wood Green; and upsized Holland & Barrett stores at both Luton and Maidstone.

Contracted rent was £57.5m as at 31 December 2016.

Following the sale of The Mall, Camberley in October 2016, this represents a like-for-like increase of £0.3m on 30 June 2016 or £0.9m on 31 December 2015.

C&R said occupancy remains strong at 95.4% for the portfolio at 31 December 2016.

The valuation of the wholly-owned portfolio at 31 December 2016 was £794.1m at a net initial yield of 6.01%, an increase of £0.5m on the valuation of £793.6m at 30 June 2016 (adjusted for the disposal of The Mall, Camberley), which represented a net initial yield of 6%.

The capital expenditure spent on the wholly-owned portfolio during the second half of the year was £7.7m.

As announced on 4 January 2017 the group has completed the refinancing of the debt on its five wholly-owned Mall properties by entering into new debt facilities totalling £372.5m.

Interest on the three new facilities has been fixed resulting in an overall blended rate of 3.27%. The weighted average maturity is 7.8 years, rising to 8.8 years if extension options are assumed to be exercised.

Hugh Scott-Barrett, chief executive, said: "The operating performance has been very encouraging reflecting stronger consumer confidence in the second half‎ of the year than had been anticipated following the result of the EU referendum. Footfall is up and, as has become the trend for our schemes, is well ahead of the national benchmark, while letting momentum has been maintained as the mix of town centre locations and affordable rents continues to attract new retailers and leisure operators.

"Activity in the investment markets continues to highlight the attractiveness of assets which have the potential for leisure and residential development, and this evidence, alongside our geographical focus on London and the south east, has helped to underpin the valuations for our wholly owned portfolio.

"Having disposed of The Mall, Camberley and refinanced our core banking facility on very attractive terms, Capital & Regional is ‎well placed to maintain the momentum behind the execution and delivery of our asset management programme. We also expect to be able to take advantage of opportunities to recycle capital into higher yielding investments with greater growth potential.

"Reflecting the positive operating performance and our confidence in our ability to continue to grow income we expect the increase in the final dividend for 2016 to be at the top end of the 5% to 8% pa targeted range."

pnorman@costar.co.uk

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