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Lettings hold up at Capital & Regional

The shopping centre landlord is spending £80m on a number of significant sites
August 10, 2017

Given the pressures on the retail sector, in-town community shopping centre landlord Capital & Regional (CAL) did well to push like-for-like net rental income up by 0.5 per cent in the six months to June. The gain would have been 4.4 per cent without the loss of BHS income.

IC TIP: Hold at 57.25p

A total of 34 new lettings were secured at an average 21 per cent premium to previous rents and an 8.4 per cent premium to estimated rental value. There is also an £80m capital expenditure plan, with three new units expected to open in the second half in Blackburn, Walthamstow and Wood Green at a cost of £11.6m. These are expected to generate annualised rental income of £1.4m.

Strong demand from tenants was reflected in the 95.5 per cent occupancy rate, flat on last year. While footfall was 0.9 per cent lower on a like-for-like basis, this was considerably better than the 2.7 per cent decline in the national index.

The cost of debt was reduced to 3.25 per cent following a refinancing in January, amounting to an annual savings of £500,000. And additional efficiency measures are expected to create annualised savings of £1.8m by 2018, equivalent to a fifth of central costs.

Analysts at Peel Hunt have trimmed their forecast for adjusted net asset value from 70p a share to 69p as at December 2017 (from 68p at end of 2016:).

CAPITAL & REGIONAL (CAL)  
ORD PRICE:57.25pMARKET VALUE:£406m
TOUCH:57.25-57.5p12-MONTH HIGH:65pLOW: 51p
DIVIDEND YIELD:6.1%TRADING PROP:nil
DISCOUNT TO NAV:16%   
INVESTMENT PROP:£924mNET DEBT:84%
Half-year to 30 JunNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201668.07.21.01.62
201768.012.11.71.73
% change-+68+70+7
Ex-div:5 Oct   
Payment:26 Oct