Capital & Regional has revised its core banking agreements and announced the exit of its finance director after seeing 30% wiped from its net asset value in six months.
In its half-year results to 30 June, the co-investing property asset manager said that NAV per share had fallen from £10.04 at the end of December to £7.06 at 30 June, largely across the group’s three funds, the Mall, the Junction, and X-Leisure.
Chairman Tom Chandos blamed the fall on “problems in the banking and investment markets, exacerbated by high leverage”. He said that the tenant facing business, in contrast, had been “resilient”.
New chief executive Hugh Scott-Barrett also outlined his strategic priorities for the group, saying it would limit the amount of capital it commits to joint ventures.
The heavy valuation losses saw C&R report a pre-tax loss of £197m for the period, compared with a £54m profit one year earlier.
C&R said its debt had fallen from £625m to £516m over the period, 74% of which relates to its German portfolio. The debt will reduce to £223m once the portfolio enters a previously announced jv with private equity firm Apollo.
The group has also revised terms on its £175m revolving loan. In return for reducing the loan to £125m, and raising the interest margin from 0.9% to 1.4%, its bankers have set a new LTV covenant at 200%.
As at 30 June, the actual LTV – which bankers also agreed will only be calculated on debt with recourse to the group – stood at 38%.
C&R also announced that finance director William Sunnucks would be stepping down to focus on his family business. He will be replaced by deputy finance director Charles Staveley on 1 October.
Scott-Barrett said: “We expect market conditions to remain challenging for the foreseeable future. In the absence of any increased availability of bank finance, property values are likely to fall further. We also expect the operating environment to become more difficult as depressed consumer confidence impacts our tenant markets.
“The measures that have been taken to create increased financial flexibility nonetheless give us confidence that we are much better able to respond to the challenges ahead and are increasingly positioned to take advantage of the opportunities that are likely to emerge.”
chris.bourke@rbi.co.uk
