Capital & Regional capitalises on “strong levels of demand” in first half of year
The chief executive of Capital & Regional has said the retail property real estate property trust has been able to capitalise on the continued strong levels of demand from retailers during the first half of 2024.
During the six-month period ending 30 June, the REIT completed 48 new lettings and renewals, up from 42 in the first half of 2023. These lettings were completed at a combined average premium of 8.8% to previous rent and 14.1% to estimated rental value.
The group’s occupancy rate also increased to 93.9%, up from 93.4% in December, due to the re-letting of three former Wilko units in its portfolio to B&M.
Capital & Regional also recorded a 17.1% increase in net rental income to £13.7 million during the period, a year-on-year increase of £2m, reflecting the impact of the group’s acquisition of The Gyle Shopping Centre in Edinburgh which has since been integrated into its portfolio.
A further £1m of contracted rent is due to convert to passing rent in the next 12 months as some of Capital & Regional’s occupiers’ rent-free periods end.
During the period, the group recorded a 17.1% increase in adjusted profit to £8.2 million, up from £7m in June 2023.
This comes after the REIT became the subject of a bidding war, with both NewRiver and Praxis potentially set to make an offer for the group. In accordance with the Stock Market code, NewRiver and Praxis are required by no later than 15 August and 16 August respectively, to announce whether or not they intend to make an offer for Capital & Regional.
Commenting on the REIT’s half year results, Lawrence Hutchings, chief executive, said: “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.
“Over the six months to the end of June not only did we complete more lettings and renewals than over the same period last year, we also achieved these at both a higher average rent per lease and average premium to the previous rent. 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. We also continue to make significant progress on our repositioning masterplan in Ilford where we have agreed terms on two major leases encompassing 44,000 sq ft of floorspace, generating approximately £0.5 million of additional income. The expanded and relocated TK Maxx is trading well and our NHS community healthcare centre is now open on the upper level.
“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.
“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.”