Capital Shopping Centres underwhelmed the market this week by delivering a poor set of half-year results compared with rival retail specialist Hammerson.
Analysts at JP Morgan Cazenove, Jefferies and Peel Hunt labelled the company’s operational performance “weak”, pointing to a 2.3% drop in rental income across its portfolio of 15 prime shopping centres, including the Trafford Centre.
By comparison, Hammerson on Monday reported a 3.3% increase in like-for-like rental income at its shopping centres over the period, driven mainly by good performances at Aberdeen’s Union Square and Croydon’s Centrale.
CSC said the drop in income in the six months to the end of June was because the “vacancy and related direct costs” of tenant failures, including Game, La Senza and Clinton Cards. These costs offset an increase in rental revenue.
The group’s vacancy rate fell 2% over the period to 95% – although this fall occurred in the first quarter – compared with Hammerson’s occupancy rate of 97.5%.
Jefferies’ Mike Prew said pursuing a strategy of driving the business for income rather than occupancy was “all well and good, but centre income is not performing”.
During the period, CSC signed 79 new long leases, reflecting £15m in annual rent, which were in line with valuation assumptions. Meanwhile, Hammerson said its long-term retail leases came in at 4.6% ahead of ERV.
However, CSC saw footfall decrease by just 1%, whereas Hammerson suffered a 2% decline – both of which were ahead of the national average fall of 3%.
CSC posted a flat NAV of 380p a share, compared with a marginal 0.9% increase for Hammerson to 535p a share.
bridget.o’connell@estaesgazette.com
