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
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
·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
·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
I expect that there will be opportunities to release more capital from
non-core activities in the next three to six months."
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.
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.
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 (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.
UK Shopping Centres Leisure UK
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
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.
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.
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
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.
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
Further details are contained in the fund valuation announcement made on 19
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
Following the All Star Lanes letting the Group has commenced marketing the
Great Northern Warehouse.
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
- ENDS -
For further information:
Capital & Regional:
Hugh Scott-Barrett, Chief Executive Tel: 020 7932 8121
Charles Staveley, Group Finance Director Tel: 020 7932 8000
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
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
This information is provided by RNS
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IMSBCBDBDXGBGDI -0- Nov/09/2012 07:00 GMT
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