Capital & Regional plc Trading Update (9366N)

TIDMCAL

RNS Number : 9366N

Capital & Regional plc

24 January 2019

24 January 2019

CAPITAL & REGIONAL PLC ("Capital & Regional" or "the Company")

UK company number 01399411

LSE share code: CAL

ISIN: GB0001741544

LEI: 21380097W74N9OYF5Z25

Trading Update

Capital & Regional, the convenience and community focused shopping centre REIT, today announces a trading update for the second half of 2018.

Commenting on the trading update, CEO Lawrence Hutchings said:

"We have again delivered a robust performance for the second half of the year, against a difficult operating environment in the UK. Our assets are located in some of the highest population growth areas, principally in London and the South East and benefit from excellent public transport connectivity. We have achieved positive operating metrics in leasing, footfall and income and, notably, these are strongest where we are most progressed in delivering our "needs" focussed community shopping centres strategy. This is encouraging and reinforces the quality of our portfolio and strength of our management platform."

Operational update

-- Group NRI for 2018 is expected to be in line with 2017 despite 20 CVAs and retailer restructurings which have impacted NRI by approximately GBP1.5 million over the whole year.

-- 87 leasing transactions completed in 2018 at an average premium of 3.1% to previous passing rent and 1.5% to ERV(1) , comprising 42 new lettings and 45 renewals totalling a combined GBP5.5 million in annual income.

-- Our affordable rents, which average GBP15.00 psf across the portfolio, and footfall outperformance mean our assets remain attractive to existing and new occupiers, supporting the remerchandising of our centres towards more diverse uses including leisure, 'grab n go' dining and essential non-discretionary community services.

-- Occupancy increased across the portfolio from 96.9% at 30 June 2018 to 97.0% at 31 December 2018.

-- Footfall across our wholly owned portfolio increased by 0.7% in the second half of 2018, once again significantly outperforming the national index, down by 3.7% in the same period, with the strongest performances at centres where we are most advanced in delivering our strategy. Footfall for the whole of 2018 increased by 1.2% on a like-for-like basis across the wholly owned portfolio, compared to the national index decline of 3.5%.

   --    Adjusted Profit(2) for 2018 is expected to be in line with market expectations. 

-- We are in ongoing dialogue with Debenhams and are advancing plans for the right sizing of some stores. Debenhams pays an average rent of GBP8.65 psf on units in three of the Group's seven wholly owned assets, a total of circa 340,000 sqft, representing 5.8% of total income.

-- M&S has announced the closure of the Luton store, the only full line store remaining in our portfolio. We have demonstrated our ability in remerchandising former department store space with BHS and are advancing plans for the unit. M&S has 8 years remaining on its lease.

Net Asset Value ("NAV") update

-- The valuation of the wholly owned portfolio, net of GBP11.6 million in capex spend, decreased by 4.5% in the second half of the year to GBP855.3 million driven by negative sentiment towards retail assets. While our centres outside London saw a net decrease of 10.1%, our three London assets increased by 1.1%, driven by income growth.

-- In total the revaluation loss, including the impact of our minority stake in the Redditch Joint Venture, which is in the process of being restructured, and a write down following the final true-up of deferred consideration on the Ipswich disposal is circa GBP46 million, equivalent to approximately 6.4p of NAV per share compared to the last reported NAV per share of 66p as at 30 June 2018.

(1) For lettings and renewals (excluding development deals and leases impacted by CVA's) with a term of five years or longer and which did not include a turnover element.

(2) Adjusted Profit incorporates profits from operating activities and excludes revaluation of properties and financial instruments, gains or losses on disposal, exceptional items and other defined terms.

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

- ENDS -

For further information:

   Capital & Regional plc                  020 7932 8000 

Lawrence Hutchings

Stuart Wetherly

   FTI Consulting                               020 3727 1000 

Richard Sunderland

Claire Turvey

Methuselah Tanyanyiwa

[e-mail]

About Capital & Regional plc

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering significant value enhancing retail and leisure asset management opportunities across its c. GBP1 billion portfolio of in-town, dominant community shopping centres.

Capital & Regional owns seven shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch. Capital & Regional manages these assets through its in-house expert property and asset management platform.

For further information see www.capreg.com.

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January 24, 2019 02:00 ET (07:00 GMT)