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CAPITAL & REGIONAL PLC - Update on trading and property portfolio

Release Date: 19/05/2022 08:00
Code(s): CRP     PDF:  
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Update on trading and property portfolio

(Incorporated in the United Kingdom)
(UK company number 01399411)
LSE share code: CAL JSE share code: CRP
LEI: 21380097W74N9OYF5Z25
("Capital & Regional" or "the Company")


Capital & Regional, the UK convenience and community focused shopping centre REIT, today provides
an update on trading and developments within its property portfolio ahead of its Annual General Meeting
this morning.

Lawrence Hutchings, Chief Executive, comments:

"Since the start of the year the Group has continued to deliver strong operational results with footfall at
almost double what it was for the same period last year and at the highest levels since the restrictions were
put in place in March 2020. Leasing momentum has also been maintained, above both ERV and previous
rents on aggregate.

We have also made significant progress across a number of key initiatives, most notably with the signing
of a new NHS community healthcare centre at Ilford, which is both a first within the UK shopping centre
market and a great example of our community shopping centre strategy. We have also now reached an
agreement with TK Maxx for a relocation and expansion of its important anchor store, which, together with
the amendments we have secured to the loan facility, will deliver a transformation of the centre through
delivery of our Ilford community centre masterplan.

We are also pleased to have reached a resolution with the lenders on The Marlowes Centre to acquire the
debt, securing the long-term ownership of the centre for the Group while also delivering a significant uplift
to our Net Asset Value.

While inflationary pressures across the UK economy provide a challenging economic backdrop, we are
seeing physical retail reaffirm its important place in the retail mix and signs of a shift in sentiment towards
our sector, especially in needs based or non-discretionary community centres. This is evidenced by the
progress we have made on specific group initiatives and a marked increase in investment market activity,
coupled with our robust leasing and occupancy performance. These factors combine to provide us with
cause for optimism and support plans to resume dividend payments in the second half of 2022."

Operations and trading

-    In the four months to the end of April 2022 footfall was 193.3% of the equivalent period for 2021.
     In total there were 18.4 million shopper visits, equating to approximately 76% of the footfall for the
     equivalent period in 2019.

-    In the year to date, we have completed 34 new lettings and renewals for a combined value of
     £1.8 million in aggregate, ahead of previous rent and ERV. 

-    At Ilford we have signed an agreement for lease with the NHS for a new community healthcare centre
     on a 25-year lease term. This will be a flagship project providing a new 20,000 sq. ft. purpose-built
     facility that is expected to open to the public in 2024.

-    Also at Ilford, we have signed an agreement to relocate and upsize TK Maxx into a new 35,000 sq.
     ft. store occupying the first floor of what was the former Debenhams unit. This will enable
     remerchandising of the existing TK Maxx unit which sits at the entrance next to Ilford station, which
     will benefit from the opening of the new Elizabeth Line.

-    Occupancy has remained stable at 93% at the end of April 2022.

-    Of the quarterly rent due on 25 March 2022, we have so far received 93%. We have now received
     96% of the rent due in respect of the first quarter of the year.

-    At Walthamstow, we have now secured vacant possession of all units required to unlock the
     development site and documentation with the Local Authority to facilitate the development is agreed
     and close to completion. We expect to clear the remaining pre-conditions to enable transaction
     completion and release of the land receipt of c. £20 million payable by our residential partner, Long
     Harbour, before 30 June 2022, at which time we will hand over the site to allow them to commence
     their development programme.

-    Snozone has recovered well after the start of the year was impacted by Government restrictions.
     Recent weeks' trading has exceeded the equivalent weeks in 2019.

Property portfolio

Ilford loan amendment

The Group has signed a package of amendments to its £39 million secured loan facility in respect of The
Exchange Centre, Ilford, to facilitate the investment of approximately £10 million for the creation of the
new community healthcare centre and anchor unit for TK Maxx.

The amendments provide for a waiver of covenants until January 2023 and improvements to existing
covenant terms to apply from January 2023 into 2024.

The amendment also provides an 18-month conditional extension option that can be triggered at the end of
2023 to extend the loan maturity from March 2024 until September 2025.

The Marlowes Centre, Hemel Hempstead

The Group has agreed to acquire its debt in respect of the Marlowes shopping centre in Hemel Hempstead
at a significant discount. The Group has paid £11.8 million in order to settle the loan and associated debt
liabilities of c. £24.0 million, representing a discount of approximately 51%.

To partially fund the transaction, the Group has substantially agreed terms on a new loan facility of
£4.0 million provided by BC Invest, a subsidiary of the Group's strategic residential partner Far East
Consortium. The new debt will be provided for an initial period of three years at a margin of 5.95%. It
will be secured on the Marlowes Centre on a non-recourse basis. The remainder of the proceeds will be
funded by existing Group cash reserves.

The transaction will result in the Group's Net Asset Value increasing by approximately £12 million, being
the level of the discount before associated costs. The asset will no longer be classified as 'Held for Sale'
following the transaction. The asset was valued at £10.5 million at 31 December 2021, representing a net
initial yield of 12.5% and net equivalent yield of 18.2%.

The Mall, Luton

As detailed in the full year results, the Group has been working closely with the lender of the secured debt
on the asset to explore a disposal of part or all of the investment or asset. This process remains ongoing
and is expected to reach a conclusion before the end of September 2022.

The Company's Annual General Meeting will be held at 10:00 (UK time) at Thomas House, 84 Eccleston
Square, Pimlico, London SW1V 1PX

19 May 2022

JSE sponsor
Java Capital

Notes to editors:

About Capital & Regional plc

Capital & Regional is a UK focused retail property REIT specialising in shopping centres that dominate
their catchment, serving the non-discretionary and value orientated needs of the local communities. It has
a strong track record of delivering value enhancing retail and leisure asset management opportunities
across its portfolio of in-town shopping centres.

Using its in-house expert property and asset management platform Capital & Regional owns and / or
manages eight shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone, Redditch,
Walthamstow and Wood Green.

Capital & Regional is listed on the main market of the London Stock Exchange (LSE) and has a secondary
listing on the Johannesburg Stock Exchange (JSE)

For further information see

Date: 19-05-2022 08:00:00
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