Ignore Capital Shopping Centres' 31 per cent rise in reported net rental income, almost all of which can be attributed to the vast Trafford Centre in Manchester it acquired last winter. Like-for-like rental income increased by a modest, but creditable, 3.6 per cent, thanks mainly to lettings in 2010.
The problem is that this had no impact on property valuations, which are based on multiples of surveyors' estimates of market rent (estimated rental values or ERVs). These estimates are being written down - by 2.2 per cent in the second half - even as rental income is increasing. This is hardly surprising: CSC has consistently reacted to the tough retailing environment by issuing leases at a lower rate. The average discount to ERV was 4 per cent for lettings last year.
So the only reason the crucial net asset value (NAV) figure, which is a geared play on portfolio valuation, was flat at 391p rather than down was the higher valuation multiples applied to ERVs. That may be justified, reflecting the continued demand for big-ticket UK property assets among international investors with cash to park.
Broker Jefferies expects year-end adjusted NAV of 402p.
CAPITAL SHOPPING CENTRES GROUP (CSCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 335p | MARKET VALUE: | £2.88bn | |
| TOUCH: | 334.5-335.1p | 12-MONTH HIGH / LOW | 412p | 283p |
| DIVIDEND YIELD: | 4.5% | TRADING PROP: | £7.5m | |
| DISCOUNT TO NAV: | 14% | |||
| INVESTMENT PROP: | £6.9bn | NET DEBT: | 115% | |
| Year to 31 Dec | Net asset value (p)** | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009* | 339 | -129.0 | -35.2 | 15 |
| 2010 | 390 | 446.0 | 68.3 | 15 |
| 2011 | 391 | 27.2 | 2.9 | 15 |
| % change | - | -94 | -96 | - |
Ex-div: 30 May Payment: 3 Jul *Restated pro forma figures to reflect the demerger from Liberty International **Adjusted NAV | ||||
