CAPITAL & Regional, the UK-focus REIT that owns in-town shopping centres, was experiencing some hard fought stability following a restructure and recapitalisation, chief executive Lawrence Hutchings said yesterday.
No final dividend was declared for the 52.1 percent held Growthpoint company, but the plan was to resume dividends in the second half of 2022, the results for the six months to December 31 showed yesterday.
Net debt to property value, however, improved markedly to 49 percent from 65 percent, although investors have through the pandemic preferred this figure to be 40 percent or lower.
Shopping centre foot accounts and valuations have been hard hit by Covid-19 related restrictions, accelerating structural changes in shopping, resulting in many real estate investment trusts experiencing lower distributions and earnings through the pandemic.
“The completion of our refocus, restructure and recapitalisation at the end of 2021 brought some hard-fought stability to our business following a period where we, and the wider retail industry, faced the impact of the pandemic and the restrictions that came with it, as well as the associated acceleration of structural changes impacting physical retailing,” he said. He said their community centres were now focused on providing “needs” or “essential” retail and services.
He said strong levels of leasing indicated that retailers and customers continue to recognise that affordable, well located, local physical retail was an essential part of local infrastructure.
The company said it had stable valuations for the first time in four years through the six months, supported by a “marked increase in investment market activity” as investors returned to the sector.
In addition, income and occupancy performance had been robust, he said.
Occupancy stood at 93 percent, up from 90 percent at June 30, 2021, and 92 percent at December 2020.
Footfall outperformed the national index by 5.7 percent, with 47.7 million visits across the portfolio in 2021.
The restructure of the £100 m (R2.02 billion) debt facility was completed in November, and debt was acquired for £81m, funded by a new £35m facility, £30m equity raise and existing cash resources.
Proceeds from the sale of Maidstone House office building for £7.1m in December would be used to reduce the £35m facility. There was £58.5m cash on hand as at December 31, of which more than £30m was maintained centrally and without any restriction.
Net asset value per share stood at 102 pence per share, well down from 150p in December 2020, reflecting the valuation decline and the impact of equity raise, net of the benefit of discounted debt repurchase.
The share price traded 3.5 percent lower at R11.57 on the JSE yesterday morning.
Final contractual milestones on the Walthamstow residential project were being completed.
Commencement of works at the 495 build-to-rent units at Long Harbour was expected to start in the second quarter or shortly thereafter.
Hemel Hempstead and Luton was reclassified as held for sale reflecting ongoing involvement and expectation of a disposal.
BUSINESS REPORT ONLINE