Capital & Regional in pre-tax loss of £55.4 million due to falling property valuations
CAPE TOWN – UK recional shopping centre landlord Capital & Regional made a pre-tax loss of £55.4 million (R1 billion) in the six months to June 30, compared with a £6.7m profit a year earlier, due mainly to a fall in property valuations in a troubled UK retail property market.
Revenue for the group with a secondary listing on the JSE fell to £45.2m from £45.5m as a growing number of retailers entered administration stifled growth. A decision on the level of the interim dividend was also deferred following South Africa-based Growthpoint’s Properties’ announcement that it was in discussions to acquire a majority stake in Capital & Regional, through a subscription for new Capital & Regional shares and an injection of capital.
Adjusted profit fell 4.5 percent to £14.8m. The decline in valuations was driven by negative sentiment towards retail assets and impact of large-store groups in financial difficulties and their restructurings.
Chief execuitve Lawrence Hutchings said they were “well placed to evolve with the ongoing structural changes in the retail sector, as evidenced by our high occupancy, resilient income metrics and strong leasing performance”. Progress had been made to strengthen the balance sheet and provide additional liquidity, given a fall in valuations, which had lifted loan-to-value to 52 percent, from 48 percent at December 2018.
The sale of non-core land at Wood Green was expected to realise £5m.
A development partner to fund and build the 450 apartment scheme at Walthamstow was in an advanced stage of being appointed. This could realise £20m in 2020 and had provided confidence to the residential opportunity at Ilford, where more than 200 apartments were planned, he said.
Forty-four new lettings and renewals were concluded at an average premium of 31.2 percent to previous passing rent – the new letting activity partially offset the £1.1m impact of store groups that were in financial difficulties and their restructurings.
Continuing occupier demand was reflected in high occupancy at 96.8 percent, compared with 96.9 percent at the same time last year.
There were 37.2 million visits across the portfolio, a decline of 1.8 percent, but it was well ahead of the national index, which was down by 3.6 percent.
“This highlights the continued resilience of our assets and the important role they play in fulfilling the needs of their local community, as well as the impact of our strategy. We have seen positive movement where we have implemented our Family Zones in Ilford and Hemel."
Capital & Regional shares closed 7.42 percent higher at R3.33 on the JSE on Wednesday.