Trading Update and acquisition of Marlowes Centre

RNS Number : 6586L

Capital & Regional plc

13 January 2016

 

13 January 2016

Capital & Regional plc

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

Trading Update and acquisition of The Marlowes Centre, Hemel Hempstead

Capital & Regional plc, the UK focused specialist property REIT, today announces the acquisition of The Marlowes Shopping Centre in Hemel Hempstead and a trading update for the second half of 2015, prior to its year end results announcement on 4 March 2016. 

Acquisition of The Marlowes Shopping Centre, Hemel Hempstead

·    On 12 January 2016 the Group exchanged contracts with Standard Life Investments for the acquisition of The Marlowes Shopping Centre, which is the main retail offer in Hemel Hempstead, for £35.5 million reflecting an initial yield of 7.0%.  The acquisition will be part funded by new debt with the Royal Bank of Scotland of £17.8 million, secured on the asset, with the remainder being financed through available Group cash resources.  The acquisition is expected to complete in early February 2016.

Hemel Hempstead is a strong south east commuter town located just outside of the M25, which has recently benefitted from significant investment from the local authority. The opportunity exists to reposition this asset and potentially consolidate it with other retail properties adjoining the scheme, as part of a regeneration of the wider town centre.

Operating performance

·    Like-for-like contracted rent across the Shopping Centre portfolio at 31 December 2015 rose 2.8% to £69.7 million compared to 31 December 2014.  Across the portfolio there were 72 new lettings and 52 lease renewals totalling £7.9 million. Lettings and renewals were agreed at an average increase of 18.5% above ERV¹.  The increase over ERV was primarily driven by new lettings resulting from the conversion of less attractive or previously non-retail space into leisure.

·    Leisure lettings in total account for £2.2 million of the £7.9 million and include the creation of a new Travelodge at Wood Green, which will now be 78 rooms as opposed to the 35 previously reported, and the creation or extension of gyms in Blackburn, Ipswich, Luton, Maidstone and Wood Green.

·    Occupancy was very strong at 97.2% at 31 December 2015, an improvement of 1.1% compared to 96.1% at 31 December 2014.

·    After a relatively slow start retail trading activity picked up in the second half of December with our in-house 'C&R Trade Index' showing retailers' like-for-like sales increasing by 1.6% compared to the month of December 2014 and 1.7% across the whole year. Footfall was down a marginal 0.4% in 2015, but significantly outperformed the national benchmark which fell by 1.7%. Car park usage across our portfolio was up 1% year-on-year.

·    The importance of providing a multi-format retail offer was demonstrated by the continued expansion of Click and Collect activity via our Collect + service which handled over 20,000 parcels during 2015 including 5,000 in December alone.

¹ For lettings and renewals with a term of five years or longer and which did not include a turnover element

Property valuations

·    The valuation of the wholly owned portfolio at 31 December 2015 was £822.7 million at a net initial yield of 5.9%, an increase of £31.7 million, or 4.0% on the valuation of £791.0 million at 30 June 2015. This has been driven primarily by an increase in valued income of £1.4 million (+2.8%) alongside yield compression on specific assets, as a result of the execution of our asset management plans. The capital expenditure spent on the wholly owned portfolio during the second half of the year was £6.9 million.

·    The valuation of the Kingfisher Centre, Redditch at 31 December 2015 was £164.4 million at a net initial yield of 6.25%. This represents an increase of £7.9 million (+5.0%) from 30 June 2015. The capital expenditure spent during the second half of the year was £2.3 million.

·    The valuation of the Buttermarket Centre, Ipswich increased by £17.2 million (+160.7%) in the second half of 2015 to £27.9 million at 31 December 2015.  This reflects the rapid progress made in repositioning the centre as a mixed retail and leisure scheme.  The capital expenditure spent during the second half of the year was £7.1 million.

Dividend

·    In line with previous guidance, the Board anticipates paying a 2015 final dividend of at least 1.5p per share which will result in a total dividend for the year of at least 3.0p per share.  The final dividend, and the proportion to be paid as a PID, is expected to be confirmed within the Group's year end results announcement.

Hugh Scott-Barrett, Chief Executive, commented:

"The accelerating momentum in terms of letting activity and capex spend seen in the second half of 2015 confirms that we are on track to deliver the attractive returns promised as part of Capital & Regional's asset management plans.The progress we are making in the transformation of Buttermarket Ipswich to a prime leisure and retail asset also showcases the skills which we will bring to The Marlowes Shopping Centre, the acquisition of which we have announced this morning."

- ENDS -

For further information:

Capital & Regional:	Tel:  [phone]
Hugh Scott-Barrett, Chief Executive
Charles Staveley, Group Finance Director
FTI Consulting:	Tel: [phone]
Richard Sunderland Claire Turvey [e-mail]

Notes to editors:

About Capital & Regional plc

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering value enhancing retail and leisure asset management opportunities across a c. £1 billion portfolio of in-town dominant community shopping centres.  Capital & Regional is listed on the main market of the London Stock Exchange and has a secondary listing on the Johannesburg Stock Exchange.   

Capital & Regional owns six Mall shopping centres in Blackburn, Camberley, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch and a 50% joint venture in the Buttermarket Centre, Ipswich.  Capital & Regional manages these assets, which comprise over 900 retail units and attract c. 1.7 million shopping visits each week, through its in-house expert property and asset management platform.

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.

 

END

 

 

MSCFMGMMNZZGVZM