Capital & Regional portfolio mostly ahead in first half

Specialist property real estate investment trust Capital & Regional updated the market on its trading in the first half of 2016 on Wednesday, ahead of its half-year results announcement on 18 August.

The London-listed firm said contracted rent was £63.6m as at 30 June, up 9.5% from £58.1m on 31 December, primarily due to the acquisition of The Marlowes in Hemel Hempstead.

Like-for-like contracted rent increased by £1.8m, or 3.2%, from 30 June 2015 and by £0.7m, or 1.2%, from 31 December.

Capital & Regional said there had been a high level of leasing activity in the first half, with 27 new lettings and 11 lease renewals totalling £3m at a combined 0.7% premium to ERV.

It also said positive leasing momentum has continued across the whole portfolio after the result of the EU referendum, with 12 new leases or renewals agreed or progressed to solicitors since 24 June.

The company said terms have been agreed with new retail and leisure operators for two of the three BHS units in the wholly-owned portfolio, contingent on the space being handed back by the administrator, with alternative offers being assessed for the third unit.

Capital & Regional’s occupancy remained strong, with The Mall portfolio at 96.5%, up from 96.4% a year ago, and The Marlowes at 92.0% on 30 June.

“Our operational performance has been strong in the first half of the year with a significant volume of new lettings highlighting the demand for good quality space at affordable rents in town centre locations,” said chief executive Hugh Scott-Barrett.

“Although occupier markets may be sensitive to any changes in consumer spending which might arise against an uncertain backdrop, our footfall has remained resilient and the continuing momentum in letting activity since the result of the referendum is encouraging.”

Many of the company’s properties were also ahead in value, with The Mall portfolio valued at £827.6m on 30 June with a net initial yield of 5.94% - an increase of £4.9m over 31 December.

The Marlowes was valued at £54.5m, up £0.7m from its acquisition price, and Kingfisher Centre in Redditch was at £163.5m with a net initial yield of 6.24%, representing a £0.9m decrease on 31 December.

Capital & Regional said the Buttermarket Centre in Ipswich increased in value by £44.3m on 30 June.

"As we move into the second half of the year, we are intensifying our focus on the recycling of capital, through which we believe we can crystallise attractive returns and take advantage of any increase in accretive investment opportunities,” explained Scott-Barrett.