Capital & Regional pleased with repositioning programme

Community shopping centre investor Capital & Regional announced its results for the year ended 30 December on Thursday, with adjusted profit rising 8.6% to £29.1m, and adjusted earnings per share ahead 7.3% at 4.10p.

The London-listed firm said IFRS profit for the period was £22.4m, swinging from a loss of £4.4m in the prior year.

Its like-for-like net rental income rose 1.9%, while it had 79 new lettings and renewals achieved during the period at an average 10.3% premium to previous rents, and an 8.4% premium to estimated recovery value.

The company’s passing rent was up 3.0% on a like-for-like basis, while its occupancy improved to 97.3% from 95.4%.

Cost efficiencies delivered annual savings of £1.2m, according to the board, with the company said to be on track for annualised savings of at least £1.8m by the end of 2018.

Shareholders were reaping the benefits too, with a 7.4% increase in the total dividend to 3.64p per share.

On the subject of the firm’s community shopping centre strategy, Capital & Regional’s board said it had seen “strong progress” since it launched the plans at its capital markets day in December.

It said the implementation of the Ilford and Maidstone pilot projects had been “highly successful”, contributing to a 0.5% increase in footfall in second half of 2017 - significantly outperforming the national index, which saw a 2.9% decline in footfall.

Positive footfall momentum continued into 2018 as well, with the company’s portfolio ahead 3.1% for the two months to the end of February, compared to the national index decline of 2.9%.

Capital & Regional said its strategic asset management masterplans had now been implemented across the portfolio, which were focused on further enhancing and improving its shopping centre community offer and trading environments.

A revised capital expenditure plan was also drawn up, with opportunities for more than 50 projects across the portfolio, totalling more than £100m.

Looking at the books, the company said it had a “robust” balance sheet with long-term debt security, and “resilient” basic and EPRA net asset value per share figures, both at 67p - declining from 68p year-on-year.

The group cost of debt was 3.25%, with an average debt maturity of 7.3 years.

“This is another strong set of results that provides me with further confidence in our decision to focus on serving the non-discretionary, value and ‘needs’ based end of consumer demand through our portfolio of community shopping centres,” said chief executive Lawrence Hutchings.

“I believe that C&R through our platform, quality portfolio, energy, insight and experience, can redefine and be recognised as the specialist owner/manager, driving strong returns in this high yielding sector.”

Hutchings said management had “confidence” that its repositioning programme and rebased affordable occupancy costs allowed its retailer customers to trade profitably in its high footfall locations, which had proven to be the “engine room” for their profits.

"The board has announced a 7.4% increase in total dividend for 2017 and, while fully aware that recent occupier failures present some challenges to short term results, believes that both the momentum we have carried through into 2018 and our strategic asset management master plans, underpin our objective of delivering annual dividend growth in a range of 5% and 8% over the medium-term.”