Capital & Regional has seen its interim profit halve to £6.7m after a 0.4% – or £12.4m – revaluation loss in the six months to the end of June.
The value of the in-town shopping centre investor’s its wholly-owned portfolio came in at £883.4m at the end of the period.
Despite the fall in profit – which dropped from £12.1m at the same time last year – adjusted profit is tracking upwards rising 6.9% putting the group “on track for its fifth year of adjusted profit growth”.
Basic and EPRA NAV per share were both resilient, at 66p and 65p respectively which compares with both at 67p in December 2017.
Chief executive Lawrence Hutchings said: “This is a robust set of results which demonstrate that our strategy is delivering for our communities, our retailer customers and our shareholders.
Strong lettings
“Furthermore the combination of strong lettings progress which has driven increased like-for-like rental income, as well as growth in footfall, where we once again comfortably outperformed the national average, and an increase in adjusted profit, all illustrate the resilience of the high quality convenient “needs” focussed community shopping centres that characterise our portfolio.
“This asset class continues to prove its importance in a polarising retail landscape.
“We have made progress across all areas of the business including delivery of strategy, centre repositioning, master planning and capex deployment, strengthening the team, retailer relationships, community engagement and cost savings.
“The Board has announced a 5.2% increase in the interim dividend compared to 2017. The Board continues to maintain its medium term objective of dividend growth in a range of 5% and 8% pa.
“Given the short term impact of CVAs or administrations the board expects full year dividend growth in 2018 to be at the low end of this range. We remain confident that the combination of our in-house expertise and the strength and affordability of our underlying assets will enable us to successfully remerchandise and evolve our centres to maintain positive momentum.”
Retail crisis
The company’s H1 2018 financial results have also been impacted by the UK retail crisis. So far this year, there have been 12 company voluntary arrangements involving national retailers or leisure operators across the UK.
Three of the CVA’s involved tenants in 12 units across Capital & Regional’s portfolio.
The company posted contracted rent of £62.3m, in line with June 2017 but down £1.8m from December 2017.
Capital & Regional said this reflected “seasonality, the impact of CVAs and retailer restructurings” as well as £0.4m of “strategic terminations to facilitate development improvements”.
Going forward, Capital & Regional expects the impact of the retail crisis to lead to a reduction of £1.2m in net rental income for the full 2018 financial year, with £0.4m relating to CVAs and £0.8m to insolvencies. It added that occupier restructurings or failures are likely to have a “greater impact” in the second half of the year.
