Cap Shop Ctrs Grp CSCG Interim Management Statement

  Cap Shop Ctrs Grp (CSCG) - Interim Management Statement

RNS Number : 3737Q
Capital Shopping Centres Group PLC
06 November 2012


                                      



6 NOVEMBER 2012



CAPITAL SHOPPING CENTRES GROUP PLC



INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JULY TO 6 NOVEMBER 2012



Highlights of the period

· Operational indicators outperforming national benchmarks:

o Second consecutive quarter of improving year-on-year footfall trend

o Occupancy broadly steady at 96 per cent (30 June 2012 - 95 per cent)

· Tenant mix improvements driving retailer investment and footfall:

o New brands brought to CSC centres include Apple at The Harlequin, Watford
and The Glades, Bromley; Vivienne Westwood, A|X and Hamley's at St David's,
Cardiff; and Schuh Kids at Lakeside and Braehead

o 45 new long term leases signed, CSC's share in aggregate £12 million of
annual rent, around 6 per cent above previous passing rent and in line with
valuation assumptions

· Progress with major projects:

o Continued programme of value-enhancing active management initiatives with
"MetrOasis" restaurant development opening in September

o Lakeside - planning consent secured for 325,000 sq. ft. retail extension

o Watford - terms agreed with local council for redevelopment of adjoining
Charter Place to create a combined 1.4 million sq. ft. regional destination

o Nottingham - close to agreement with local authority on the redevelopment
of Broadmarsh and its surroundings

· Strengthening the financial position:

o Issued £300 million 2.5 per cent 2018 convertible bonds which completed in
October and augmented the group's cash and available facilities of £289
million at 30 September

David Fischel, Chief Executive of Capital Shopping Centres Group PLC,
commented:

"Our prime UK shopping centres have recorded positive momentum with steady
footfall figures and the opening of 60 new stores and restaurants in the
period. We continue to make good progress on our pipeline of active management
projects and extensions which will ensure that our centres continue to provide
attractive destinations to consumers and retailers for the long term."

                                      

ENQUIRIES:

                                      

Capital Shopping Centres Group PLC
David Fischel   Chief Executive                 +44 (0)20 7960 1207
Matthew Roberts Finance Director                +44 (0)20 7960 1353
Kate Bowyer     Head of Investor Relations      +44 (0)20 7960 1250
Public relations
UK              Michael Sandler/Wendy Baker,    +44 (0)20 7796 4133

                Hudson Sandler
SA              Nicholas Williams, College Hill +27 (0)11 447 3030



Conference call

A conference call for analysts and investors will be held today at 9.00 GMT.

A copy of this announcement is available for download from our website at

www.capital-shopping-centres.co.uk

                                      

Introduction

The third quarter has been characterised by positive momentum in our centres,
with some 60 new stores opening and stable occupancy. The on-going financial
effects in the form of vacancy and void costs of retailer failures at the end
of 2011 and to date in 2012 will, however, take some time to clear.

At the same time we have made considerable progress on our major development
opportunities. At Lakeside we have obtained a favourable planning decision for
a long-awaited retail extension. At Watford we now have agreement with the
local authority over objectives for an improved town centre retail and leisure
offer. At Nottingham our discussions with local stakeholders have progressed
well.

We have also taken the opportunity of an improved corporate borrowing
environment to increase the group's financial flexibility and broaden its
sources of funding through a significant convertible bond issue.

Operational indicators

CSC continues to benefit from shoppers' and retailers' focus on the UK's
stronger retail destinations:

· We have achieved a second consecutive quarter of improved footfall
trends in our centres, with particularly encouraging increases in Manchester,
Cardiff and Watford. For the year to date, CSC's footfall is now one per cent
below that at the same point of 2011. By comparison, benchmark UK national
retail footfall for the year to date as measured by Experian is three per cent
below that of 2011

· Occupancy across CSC's centres is steady at 96 per cent (30 June 2012 -
95 per cent, 31 December 2011 - 97 per cent). By contrast, UK town centre shop
vacancy remains around 15 per cent according to the Local Data Company. We
have successfully relet the majority of the 131 units (6 per cent of rent)
affected by tenant failures in the year to date. However, 48 units (2 per cent
of rent) still remain closed and in the hands of administrators

· We have made good progress in addressing 2012 lease expiries and in
managing in advance those due in 2013. At the beginning of 2012 these amounted
to 11 per cent and 10 per cent respectively of the Group's rent roll

Tenant mix improvements

Some 60 new stores have opened in our centres since June including 6 new
brands opening in a CSC centre for the first time. In a significant
demonstration of commitment, tenant investment in these and other stores
across the portfolio amounts to over £50 million for the year to date.

45 new long term leases have been agreed, in aggregate £14 million of annual
rent (CSC's share £12 million). Overall the new terms represent a 6 per cent
increase from previous passing rent for those units and are in line with
valuation assumptions. These include significant new UK and international
brands and established retailers up- and down-sizing to create their optimal
format, for example:

· Victoria's Secret - to open at The Trafford Centre in mid 2013, their
first UK store outside London

· Next at The Trafford Centre, Ernest Jones at Lakeside and H&M at The
Chimes, Uxbridge - all upsizing and part of a continuing trend of unit
consolidation to meet strong tenant demand for larger format stores

· L'Occitane - now open in Eldon Square, their first store in Newcastle
city centre and Office, opening their largest store in the North

· Thomas Sabo - open at Victoria Centre, Nottingham, and coming soon to
Chapelfield, Norwich

Active management and organic growth opportunities

CSC's business model starts with a focus on the consumer with the objective of
providing compelling destinations. We estimate that we attract some 30 million
individual visitors per annum who are increasingly knowledgeable about the
range of channels available to them and look to our centres for the ideal
combination of product, experience and service.

Our active management projects and major extension plans are focused on
providing the right mix of global and top UK retail brands alongside the best
places to eat and socialise.

· Active management projects include the following:

o At Braehead we have completed our refreshment of the upper mall,
introducing retailer-branded double-height panels, new lighting and better
sight lines. The fresh feel will be reinforced by new catering concepts
opening before Christmas

o At The Trafford Centre, work has started in Barton Square to create a
Sealife Aquarium attraction near to the LegoLand Discovery Centre and planning
consent has been granted for 93,000 sq. ft. of additional retail space on the
upper level

o At Metrocentre, we are creating a new "Platinum" mall, bringing a more
aspirational feel to the brands on offer and the dining experience. The 360
Champagne Bar and Mamas & Papas have opened, with more new names to come
before Christmas. Recent lettings have demonstrated good growth in restaurant
rental levels

· At Lakeside, having secured planning consent we are reviewing options
for compelling new attractions in the retailer mix. Subject to signing up an
appropriate level of pre-lets, we could be on site in 2014. We are also
working on plans for a new leisure destination at Lakeside comprising new
cafes, restaurants, bars and various leisure uses

· At Watford, the adjoining Charter Place offers us the opportunity to
develop over 320,000 sq. ft. to meet unsatisfied demand in the town centre for
larger format units appropriate for flagship stores and to rectify the limited
catering and leisure offer in the town. We expect to make a planning
application in early 2013 and the new destination could be open when the
Metropolitan underground line extension completes in 2015

· At Nottingham, the City has potential to offer one of the UK's finest
shopping experiences.Discussions between CSC and Nottingham City Council have
progressed well and are now focused on achieving heads of terms for a
development agreement which will enable a core scheme to be progressed at
Broadmarsh. At Victoria Centre, refurbishment options for the interiors are
being developed with architects and the planning application for the Northern
Extension remains with the Council.

· We have acquired for £2.8 million a 17 acre property adjacent to
Metrocentre with potential for future development

Financing

On 20 September the group announced the issue of £300 million 2.5 per cent
convertible bonds due 2018. Settlement took place in October. We regard the
convertible bond as a positive component of the group's overall capital
structure.

At 30 September 2012 net external debt had increased marginally to £3.5
billion and the net debt to assets ratio based on 30 June 2012 valuations was
49.5 per cent. On a pro forma basis, were the convertible bonds to convert
into equity, the net debt to assets ratio would reduce to 45 per cent.

Property valuations

We continue to see a good level of interest from investors for the highest
quality retail assets which is keeping yields firm and underpinning
valuations. By contrast, demand continues to weaken for non-prime properties,
with capital values according to the IPD monthly index relating to all retail
falling by 1.3 per cent for the third quarter, 4.2 per cent for the year to
date (CSC six months to 30 June 2012 - no change).

The next independent valuation of CSC's assets will be undertaken on 31
December 2012 and published with the results for 2012 on 27 February 2013.



NOTES TO EDITORS:



Capital Shopping Centres is the leading specialist UK regional shopping centre
REIT.

We own and operate many of the very best shopping centres, in the strongest
locations right across the country, attracting over 320 million customer
visits a year. We estimate that half of the UK population, some 30 million
people, visit a CSC centre every year and two thirds live within a 45 minute
drive time of one of our centres.

With over 16 million sq ft of retail space, valued at £7 billion, every single
one of the UK's top 20 retailers is in our shopping centres, alongside some of
the world's most iconic global brands.

We own ten of the UK's top 25 shopping centres including The Trafford Centre,
Lakeside, Metrocentre, Braehead, and The Mall at Cribbs Causeway, and in-town
prime destinations such as Cardiff, Manchester, Newcastle, Norwich,
Nottingham, Bromley, Uxbridge, Watford and Stoke-on-Trent.

In November 2011, we acquired Broadmarsh shopping centre in Nottingham
bringing our portfolio to 15 centres.

We are fully committed to supporting our local communities and the wider
environment through meaningful and hands-on initiatives.

For further information see www.capital-shopping-centres.co.uk





This announcement contains "forward-looking statements" regarding the belief
or current expectations of Capital Shopping Centres Group PLC, its Directors
and other members of its senior management about Capital Shopping Centres
Group PLC's businesses, financial performance and results of operations.
These forward-looking statements are not guarantees of future performance.
Rather, they are based on current views and assumptions and involve known and
unknown risks, uncertainties and other factors, many of which are outside the
control of Capital Shopping Centres Group PLC and are difficult to predict,
that may cause actual results, performance or developments to differ
materially from any future results, performance or developments expressed or
implied by the forward-looking statements. These forward-looking statements
speak only as at the date of this announcement. Except as required by
applicable law, Capital Shopping Centres Group PLC makes no representation or
warranty in relation to them and expressly disclaims any obligation to update
or revise any forward-looking statements contained herein to reflect any
change in Capital Shopping Centres Group PLC's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.

Any information contained in this announcement on the price at which shares or
other securities in Capital Shopping Centres Group PLC have been bought or
sold in the past, or on the yield on such shares or other securities, should
not be relied upon as a guide to future performance.

                                      

                                      

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IMSQELFBLFFEFBZ -0- Nov/06/2012 07:00 GMT