Capital & Regional hikes dividend after year of rental growth

Shopping centre specialist Capital & Regional reported a 5% increase in like-for-like net rental income (NRI) in its full-year results for 2023 on Tuesday, as well as a 2.6% increase in like-for-like valuations compared to the prior year.

The London-listed real estate investment trust said it achieved 86 new lettings and renewals, surpassing the previous year's figure of 80, with a combined average premium of 6.8% to previous rent and 16.6% to estimated rental value (ERV).

In September, Capital & Regional acquired the Gyle shopping centre in Edinburgh for £40m, partly funded through a £25m equity raise.

The board said the acquisition, made at a net initial yield of 13.5%, was expected to rebase to around 12%.

It also reported 9.7% growth in adjusted earnings per share, rising to 6.8p from 6.2p in December 2022.

The proposed final dividend was hiked by 7.3% to 2.95p per share, resulting in a total dividend for the year of 5.7p per share compared to 5.25p per share in the previous year.

“Our ongoing focus on delivering our proven community strategy and increasing our exposure to non-discretionary and needs based retail and services categories, continues to support our progress and has helped us deliver another positive set of results,” said chief executive officer Lawrence Hutchings.

“Occupier demand coupled with our accretive capex programme has driven rental growth, underpinned a 9.7% increase in earnings and, with values also up slightly, given us the confidence to increase the dividend.

“The structural changes in retail continue to evolve, with online penetration now maturing and a continued return to the store by consumers meaning physical retail has cemented its position as a vital part of the distribution framework.”

Hutchings said that was especially evident in the firm’s core categories of value and non-discretionary merchandise, adding that retailers were continuing to focus on coupling the online platform with stores in a seamless guest experience.

“The rapid re-leasing of all three of our Wilko units to B&M in the first few months of 2024, further demonstrates the quality of our locations, the relevance of our strategy and our team's ability to capture demand from retailers for affordable space in urban locations.

“This backdrop, coupled with the improvement in our underlying operational business, and with the Company's balance sheet stable, gave us the confidence to proceed with the Gyle acquisition in September 2023.

“It marks our first step towards rebuilding the business through our continued capex programme and a disciplined approach to opportunities to buy well positioned retail led real estate at attractive entry points.”

At 0923 BST, shares in Capital & Regional were up 4.79% at 51.87p.

Reporting by Josh White for Sharecast.com.