International News

Capital & Regional’s occupier-led demand drives its rental and earnings growth

The Gyle, Edinburgh.

UK convenience and community focused shopping centre REIT, Capital & Regional, has published its half year results to 30 June 2024, completing more lettings and renewals than 2023’s comparative period and achieving these at both a higher average rent per lease and average premium to rent.  

The Group achieved 48 new lettings and renewals compared to the 42 in the six months to June 2023 at a combined average premium of 8.8% to previous rent and 14.1% to ERV with its occupancy rate improving to 93.9% (December 2023: 93.4%) due to re-letting the former Wilko units in its portfolio.  

We have delivered another positive set of results during the first half of 2024, with our proven community strategy continuing to support our progress. Against what at times has been a challenging economic backdrop our team has been able to capitalise on the continued strong levels of demand from retailers for space within our centres, particularly those in London. This is reflected in the strong leasing momentum we have maintained,” comments Chief Executive, Lawrence Hutchings.  

The rapid re-leasing of all three of our former Wilko units to B&M in the first few months of 2024 is one of the most notable examples of the demand for space in our centres from retailers that need to be at the heart of local communities, which is further evidenced by the strong start we have made to the second half of the year.” 

The Group reported a 17.1% increase in its net rental income to £13.7 million (June 2023: £11.7 million) reflecting the impact of the Gyle acquisition which has been integrated into its portfolio with a 21% increase in statutory revenue to £34.5 million (June 2023: £28.5 million). A further £10 million of contracted rent is due to convert to passing rent in the next twelve months as occupiers’ rent-free periods end. Its portfolio reflected a 99.20% rental collection rate compared to the 98.40% reported for 2023’s interim results.  

We have seen a further period of stable valuations and successfully integrated Gyle shopping centre into our portfolio where the initiatives we have undertaken since acquisition last September have already led to a 5% increase in value,” notes Hutchings.

Capital & Regional reported a 0.8% increase in like-for-like valuations over 2023 to £374.9 million (December 2023: £372.8 million) with 5% growth in the valuation of the Gyle to £42 million since its acquisition in September 2023 for £40 million.  

The Group reported a 17% increase in its Adjusted Profit to £8.2 million (June 2023: £7 million) with its IFRS profit for the period of £45 million (June 2023: £6.1 million).  

Net £3.1 million was invested during the period including completion of the new NHS community healthcare centre in Ilford that opened in May 2024 and remerchandising of the former WH Smith in Wood Green, creating new units for Pure Gym, Wendy’s, and Wingstop that have recently opened. 

Its Net Asset Value (NAV) increased to £203.9 million (December 2023: £202 million) with its NAV per share and EPRA NTA per share at 88 pence and 85 pence respectively (December 2023: 90 pence and 88 pence respectively due to the increased number of shares in issue following the June 2024 scrip dividend).  

It has a long debt maturity profile of 3.6 years with a low average cost of debt of 4.25% (December 2023: 4.1 years, 4.25%). Approximately 80% is hedged for the next two and a half years. Its Group Net Loan to Value (LTV) reduced to 43% from 44% as at 30 December 2023.  

Capital & Regional’s Board proposed an interim dividend of 2.85 pence per share, a 3.6% increase on June 2023’s 2.75 pence per share.  

Notwithstanding the previously announced and ongoing corporate activity, Capital & Regional remains well placed to continue to deliver on its successful community strategy to drive income growth and value in support of progressive shareholder dividends,” Hutchings concludes.