Trading Update and Notice of Interim Results

17 July 2018

CAPITAL & REGIONAL PLC ("Capital & Regional" or "the Company")

UK company number 01399411

LSE share code: CAL

ISIN: GB0001741544

LEI: 21380097W74N9OYF5Z25

Trading Update and Notice of Interim Results

Capital & Regional, the UK convenience and community focused shopping centre REIT which has a c. £1 billion portfolio, today announces a trading update for the first half of 2018, prior to the publication of the Company's half year results announcement which will follow on 14 August 2018. 

Lawrence Hutchings, Chief Executive of Capital & Regional, said:

"Our strong letting progress and footfall performance demonstrate that our community shopping centre strategy, focussing on 'needs'-based and non-discretionary offers, is resilient against the backdrop of a challenging first half of 2018 for the retail sector. We are remerchandising our space, investing in our properties and talking to our customers to ensure that each centre is carefully tailored to its local community. By reducing our exposure to fashion and offering a more diversified range of products and services in conveniently located, welcoming and vibrant environments, we are positioning the business for long term success. 

"The first six months of 2018 has reinforced our view that the structural changes taking place in physical retailing continue to create polarisation in retail venues with our type of community shopping centres at one end and destination centres at the other. We continue to believe that community shopping centres are ideally placed to provide the critical point where product meets people and play an increasingly integral role in the new retail landscape through click and collect and store to customer delivery.  This, allied to the expertise of our recently strengthened in-house management team, continues to underpin our confidence in the further development and growth of the C&R business."

 Footfall

·     The first half of 2018 saw 37.9 million shopper visits across our wholly-owned portfolio, representing like-for-like growth of 1.7% and another period of considerable outperformance of the national index which was down 3.4%.

·     The relevance of our centres in the omnichannel trading environment was demonstrated by growth in Click & Collect transactions in the first half of the year, up 35% year on year.

Leasing

·     We completed 21 new lettings and 23 lease renewals in the first half of 2018 totalling £3.3 million in contracted income, at a combined premium to ERV¹ of 3.3%, equating to an uplift on the previous passing rent¹ of 3.4%. 

·     Leasing in the period reflected our strategy of remerchandising to diversify uses and tenant mix with notable lettings including Bodycare and Smiggle in Blackburn; four floors of office space in Luton and KFC and Muffin Break in Maidstone.  At Walthamstow, Pret is fitting out one of the last two remaining units from the former BHS space and in Maidstone we are in advanced discussions with a national retailer to take the 65,000 sq ft former BHS unit, which will effectively complete the reletting of all of the four former BHS units across the portfolio.

Occupancy

·     Occupancy remained high at 96.9% at 30 June 2018, marginally below the December 2017 equivalent of 97.3%, which benefits from the peak Christmas trading, and ahead of June 2017 which was 95.5%.

Capex progress

·     We have invested £6.7 million of capex in the first half of 2018 on projects to remerchandise and reposition our assets.  We are currently on site to further improve the guest services at Ilford and at Hemel, where we will also shortly be commencing work on a new family area and recladding external units.  There are currently over 20 different projects live across the portfolio driving improvements in our centre facilities and fuelling future growth.

Property valuations

·     The valuation of the wholly-owned portfolio at 30 June 2018 was £883.4 million, reflecting a net initial yield of 6.04%.  This represents a fall of £3.2 million or 0.4% from December 2017.

·     In total the revaluation loss across the whole portfolio, net of the capex spend in the period and the impact of joint ventures, is £12.1 million, equivalent to approximately 1.7p of Net Asset Value per share. 

Further information will be provided when Capital & Regional announces the Company's half year results for the six months ended 30 June 2018 on Tuesday 14 August 2018.  An analyst presentation will be held at 9.00 a.m. on the day and this will also be accessible via a conference call and webcast.  Please contact FTI Consulting at capreg@fticonsulting.com for more information or to register attendance.

¹ For lettings and renewals (excluding development deals) with a term of five years or longer and which did not include a turnover element.

- ENDS -

For further information:

Capital & Regional plc                  020 7932 8000

Lawrence Hutchings

Charles Staveley

FTI Consulting                               020 3727 1000

Richard Sunderland                        

Claire Turvey

Methuselah Tanyanyiwa

capreg@fticonsulting.com

About Capital & Regional plc

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering significant value enhancing retail and leisure asset management opportunities across its c. £1 billion portfolio of in-town, dominant community shopping centres.

Capital & Regional owns seven shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch. Capital & Regional manages these assets through its in-house expert property and asset management platform.

For further information see www.capreg.com.