Capital & Regional CAL Interim Management Statement

  Capital & Regional (CAL) - Interim Management Statement

RNS Number : 7167Q
Capital & Regional plc
09 November 2012




                                                               9 November 2012



                                      

                            Capital & Regional plc

                                      

                         Interim Management Statement

             For the period from 30 June 2012 to 8 November 2012



Capital & Regional plc, the specialist retail property company today announces
its interim  management  statement for  the  period from  30  June 2012  to  8 
November 2012.



Highlights



The key events during the period were:



·Acceleration of strategic focus on  UK Shopping Centres through the  sale 
of The Junction realising £14.1million.



·Occupancy improving over  the quarter  with valuations  and passing  rent 
broadly stable



·Group debt position  strengthened by the  signing of a  new £25m  central 
facility to 2016 and extension of the  Great Northern facility by one year  to 
October 2014



·Net debt  to value  in The  Mall  now 55%  following £80.1  million  debt 
repayment from sale of Norwich



·Debenhams extending and refitting their store in Blackburn



·Mall footfall has outperformed  the national index by  3.8% year to  date 
demonstrating the well positioned nature of the portfolio.





Hugh Scott-Barrett, Chief Executive, commented:



"The sale  of The  Junction is  an important  step in  accelerating Capital  & 
Regional's focus on our core UK  shopping centre business. Following on  from 
eight earlier property sales which were  sold for £478 million, 2.3% ahead  of 
prevailing valuation, we have generated an annualised return of 21% since  the 
restructuring in 2009.



Our core business has continued to perform well. The slight uplift in  valued 
income reflects  continued progress  in  the re-letting  of space  vacated  by 
retailer administrations  in the  first half  of the  year. The  pipeline  of 
demand for  space continues  to  provide a  cushion against  further  retailer 
failures.



I expect  that  there will  be  opportunities  to release  more  capital  from 
non-core activities in the next three to six months."



Operating performance



The  third   quarter  performance   continued  to   demonstrate  the   overall 
affordability and well positioned nature of our property portfolio in the UK.



New lettings, renewals and rent reviews



UK Shopping Centres



There has been a good volume of new lettings, lease renewals and rent  reviews 
across the UK Shopping Centre Business during the third quarter of 2012. In  a 
challenging retail environment we are continuing to negotiate with a number of
retailers for new space although deals are taking longer to complete.



                               6 months to       3 months to       9 months to

                              30 June 2012 30 September 2012 30 September 2012
Number of new lettings^1                29                15                44
Headline rent (£m)                     2.1               0.6               2.7
Comparison to ERV (%)                (1.5)               8.9               0.5
Number of lease renewals                10                10                20
Revised rent (£m)                      1.0               0.5               1.5
Comparison to ERV (%)                  0.2               1.7               0.8
Number of rent reviews
settled                                 37                83               120
Revised passing rent (£m)              2.3               4.6               6.9
Uplift to previous rent (%)            3.2               0.2               1.2
Comparison to ERV (%)                  7.0               0.0               2.4

^

^1 Lettings with an  element of turnover  rent have been  excluded as has  the 
re-letting of the TJ Hughes space in Maidstone to Beale's on a flexible basis



In addition to the lettings  shown above there were  six lettings in Q3  (YTD: 
12) with a base  rent of £0.3  million (YTD: £1.0  million) which included  an 
element of turnover rent targeted to top up the base rent to ERV.



In the shopping  centre portfolio significant  new lettings were  made to  The 
Entertainer at Redditch, Deichmann  at Walthamstow and  Vodafone at Luton.  In 
Camberley Trespass has taken a unit. Whilst at Lincoln, O2 and Vision  Express 
have signed new 10 year leases. Cloud Networks, a wi-fi provider has signed an
agreement to provide free  wi-fi access across the  portfolio providing a  new 
income stream and an additional service to our customers.



Renewals have completed with  Aldo at Wood Green,  Superdrug in Blackburn  and 
Model Zone at Maidstone.



Since 30 September 2012 Debenhams have signed up to a 4,000 sq ft extension of
their space at Blackburn  and will be refitting  their entire store. An  Apple 
franchise has taken a unit at Sutton Coldfield.



UK Leisure



In the UK Leisure Business four new lettings were completed during the quarter
with passing rent of £0.4 million, at 3.7% above ERV. A further four new
lettings were concluded with base rent of £0.1 million with additional
turnover rent targeted to achieve ERV. The most notable letting during the
quarter was of the nightclub at Xscape Milton Keynes to Wonderworld.



At the Great Northern Warehouse, the All Star Lanes agreement for lease is now
unconditional and they are fitting out the unit to commence trading in early
in 2013. The entrance to the casino at this property has been reconfigured to
improve the operating ambience.



Footfall



The Mall's footfall has outperformed the benchmark footfall index by 3.8% year
to date. The Mall's footfall has declined by 0.9% in shopper numbers over  the 
first ten months of the  year compared to a decline  of 4.7% in the  benchmark 
index, demonstrating the strength of the portfolio.



Occupancy levels



Occupancy (like for like) September 2012 June 2012 September 2011
UK Shopping Centres                95.0%     94.6%           94.9%
Leisure                            96.0%     95.9%           95.5%
UK businesses                      95.3%     94.9%           95.1%
Germany^1                          98.7%     98.7%           98.6%

^^1 Excludes portfolio 4



The UK  Shopping Centres  occupancy rate  of 95.0%  at 30  September 2012  has 
improved by 0.4%  over the quarter  reflecting the positive  progress made  on 
lettings and renewals.



Administrations



                               UK Shopping Centres Leisure  UK
Administrations (units)
6 months to 30 June 2012                        49       3  52
3 months to 30 September 2012                    9       1  10
Period to 30 September 2012                     58       4  62
Administrations (Passing rent)                  £m      £m  £m
6 months to 30 June 2012                       4.8     0.4 5.2
3 months to 30 September 2012                  0.3       - 0.3
9 months to 30 September 2012                  5.1     0.4 5.5



There were 10 administrations in the UK during the third quarter of 2012  with 
a passing rent of £0.3 million. At 30 September 2012 there were eight  tenants 
in administration with  passing rent of  £0.5 million who  were still  trading 
from their units.



There were  no  administrations  in  the German  portfolio  during  the  third 
quarter.



There have been five  retail insolvencies in the  UK Shopping Centre  Business 
during October  2012 with  passing rent  of £0.4  million. There  has been  no 
impact arising from the administration of Comet.



Cash collection



Rent collection  rates  in  UK  shopping  centres  (adjusted  for  tenants  in 
administration) continue to be strong, with  97.0% of rent and service  charge 
being paid within 14 days of the due date compared to 96.0% as at June 2012.



Rental income



Passing rent remained  broadly stable across  the UK funds  and in the  German 
portfolio during the third quarter.



Passing rent (like for like) September 2012 June 2012 September 2011
                                         £m        £m             £m
UK Shopping Centres                    81.6      81.6           82.1
Leisure                                51.0      51.3           51.2
Total UK                              132.6     132.9          133.3
                                         €m        €m             €m
Germany^1                              32.1      32.4           32.5

^

^1 Excludes portfolio 4



Passing rent in all  segments was largely unchanged  over the quarter. The  UK 
Shopping Centre business  has seen a  reduction in passing  rent year on  year 
owing to the insolvencies that occurred during the first half of 2012.



Asset management and development



Progress continues to be made in advancing asset management initiatives across
the portfolio.



At Hemel Hempstead work on pre-letting the development is progressing and  51% 
of the scheme by rental value (64% by area) is in solicitors' hands.



At Lincoln  terms  have been  agreed  with the  two  major retailers  for  the 
reconfiguration  of  this  scheme  and  the  legal  documentation  with  these 
retailers is being finalised.



In the Mall the development proposals at Camberley have been gaining momentum.
We have appointed Centros to work alongside us and with the Council to provide
further impetus to this opportunity.



Finance



Fund and property valuations



On 19 October 2012, we announced the third quarter valuations for The Mall and
X-Leisure funds. The Mall valuation decreased 1.1% driven primarily by outward
yield shift of 9 bps. As with recent valuations schemes in London are  showing 
strength while those outside of London have been less resilient.



The value  of the  X-Leisure  fund properties  increased  by 0.6%  during  the 
quarter.



Further details are contained  in the fund valuation  announcement made on  19 
October 2012.



Disposals



On 19 October  2012 the Group  sold its  13.43% interest in  The Junction  for 
expected proceeds of £14.1 million including performance fees. This represents
a return of 21.0% since the fund  restructure in 2009. The proceeds have  been 
used to reduce borrowings and the disposal is not expected to have a  material 
impact upon  recurring profitability.  Further  details can  be found  in  the 
announcement made on 19 October 2012.



The Mall sold The Castle Mall, Norwich in July 2012 for £77.3 million at a net
initial yield of 7.8%. The Mall used the proceeds and its operating surplus to
repay debt  of £80.1  million  in July,  leaving  outstanding debt  of  £570.9 
million at 30 September  2012. Net debt  to property value is  now 55% in  The 
Mall.



Following the All  Star Lanes letting  the Group has  commenced marketing  the 
Great Northern Warehouse.



Financing



On 31 August the Group signed a new revolving credit facility for £25 million,
a reduction from £58 million and with the maturity extended to July 2016  from 
September 2013.  These  changes better  reflect  the Group's  working  capital 
requirements and reduce the cost of the undrawn facility. At the same time the
Group extended the  maturity of the  loan on Great  Northern Warehouse by  one 
year to October 2014.



Debt repayments were made using the Group's central facility in respect of the
Hemel  Hempstead  and  Great  Northern  Warehouse  properties  totalling  £8.1 
million. Following the disposal of the Group's interest in The Junction  £12.8 
million of the  central facility  has been  repaid with  £2 million  remaining 
drawndown.



                                   - ENDS -



For further information:



Capital & Regional:
Hugh Scott-Barrett, Chief Executive      Tel: 020 7932 8121
Charles Staveley, Group Finance Director Tel: 020 7932 8000
               Maitland:                          
Martin Leeburn                           Tel: 020 7379 5151
Daniel Yea                               Tel: 020 7379 5151



  Notes to editors:



About Capital & Regional plc



Capital & Regional  is a specialist  property company with  a track record  of 
developing asset management opportunities in town centre shopping centres  and 
out of town retail parks.



Capital &  Regional founded  The  Mall in  conjunction with  Aviva  Investors. 
Capital & Regional acts as Property and  Asset Manager for the Mall and  holds 
20.1 % of this fund.



Capital & Regional  & AREA Property  Partners each  hold a 50%  interest in  a 
German retail property portfolio which is managed by Garigal Asset  Management 
GmbH, in which Capital & Regional holds a 30% interest.



Capital & Regional also  has an 11.9%  stake in the  X-Leisure fund, which  is 
managed by X-Leisure Limited in which Capital & Regional holds a 50% interest.



Capital &  Regional has  a number  of other  joint ventures  and  wholly-owned 
properties.



For further information see www.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.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSBCBDBDXGBGDI -0- Nov/09/2012 07:00 GMT
 
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