Capital & Regional has announced results for the year ended 30 December 2016. EPRA NAV fell to 68p from 71p while adjusted earnings per share rose by 11.7% to 3.8p (based on earnings of £26.8m, also up 11.7%), allowing them to fully fund a dividend of 3.39p, up 8.7% on the previous year.
The chairman says the NAV fall reflects the impact of one-off costs associated with the successful long-term refinancing of the group’s core banking arrangements, the impact of stamp duty increases as well as the modest fall in valuations since the EU referendum in June 2016. He goes on to say that, whilst the EU referendum vote did slow investment activity, the core portfolio has proven to be very resilient with valuations adjusted for capex down only 2%, supported by a steady volume of transactional evidence for assets in London and the South East.
Net Rental Income (NRI) within the wholly-owned portfolio grew by 6.6%, from GBP47.3 million to GBP50.4 million. Stripping out the impact of the Hemel acquisitions, and the disposal of Camberley, underlying growth in wholly-owned NRI was 1.2%. Adjusted for the impact of the BHS administration, NRI grew by approximately 2.4%. New lettings and lease renewals within the wholly-owned portfolio excluding Camberley aggregated GBP5.6 million and were agreed at rents 2.1% ahead of ERV. They were also ahead of previous passing rent by approximately 18%.
The Group has spent GBP21.2 million of capex on wholly-owned assets during the year. The redevelopment of the Buttermarket Centre, Ipswich, has been completed on time and on budget facilitating the sale post year end. This was a complex construction project involving the creation of an Empire Cinema on the two upper levels surrounded by a suite of nine new restaurants including Coast to Coast, Prezzo, Wagamama and Cosy Club. The joint venture invested capex of GBP25.1 million to transform the scheme from a substantially empty shopping centre to a thriving leisure-led destination. Shortly after year-end they sold their joint venture interest in The Buttermarket Centre, Ipswich at a net equivalent yield of 5.9%, realising an expected GBP13.5 million to the Group, They have followed this up with the acquisition of The Exchange Centre, Ilford, for GBP78 million, representing a net initial yield of 6.7%, which completed on 8 March 2017. The Exchange Centre, Ilford, dominates retail in the town centre and offers great potential for leisure and residential development given its Crossrail link which is expected to open in 2019.
The sale of The Mall, Camberley, for GBP86 million, representing a Net Initial Yield of 5.9%, was completed in November 2016. The transaction crystallised an IRR of 10% based on the acquisition price at the time of Capital & Regional’s buy-out of The Mall Fund in 2014. It has also raised funds to invest in more accretive investments both in our existing portfolio and by way of acquisition. The Camberley sale followed the earlier acquisitions of the Marlowes Shopping Centre in Hemel Hempstead and the adjacent Edmonds Parade and Fareham House properties for combined consideration of GBP53.8 million. The consolidated scheme presents the Group with the opportunity to reposition the Hemel Hempstead town centre.
CAL : Capital & Regional earnings rise as portfolio recycling continues