Capital & Regional plc a UK focused specialist property REIT with presence on the JSE, has released its trading update for the second half of 2016.
As regards the operating performance of its wholly owned portfolio, the company said 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 once again outperformed
the industry benchmark, by 1.9%.
Continued growth was witnessed in leasing activity in the second half of 2016 with 34 new lettings and 15 lease renewals totalling £2.8 million(1) in annual rental income, at a combined 6.1% premium to ERV(2). 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.
For the second half of the year, contracted rent was £57.5 million as at 31 December 2016. Following the sale of The Mall, Camberley in October 2016, this represents a like-for-like increase of £0.3 million on 30 June 2016 or £0.9 million on 31 December 2015(3).
Also, occupancy remains strong at 95.4% for the portfolio at 31 December 2016.
Capital & Regional said valuation of the wholly-owned portfolio at 31 December 2016 was £794.1 million at a net initial yield of 6.01%, an increase of £0.5 million on the valuation of £793.6 million at 30 June 2016 (adjusted for the disposal of The Mall,
Camberley), which represented a net initial yield of 6.00%. The capital expenditure spent on the wholly-owned portfolio
during the second half of the year was £7.7 million.
Capital & Regional it has completed the refinancing of the debt on its five wholly-owned Mall properties by entering into new debt facilities totalling £372.5 million. 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.
Commenting on the result, Hugh Scott-Barrett, Chief Executive, Capital & Regional 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.
He added that “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”.
As an outlook for the year 2017, he hinted that “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% per annum targeted range.” he concluded.