Capital and Regional has announced its full year results for the year ended 30 December 2018. During the year, the company says that there has been an increase of 4.8 per cent in Adjusted Profit to £30.5 million from £29.1 million. It says that the increase has been achieved despite the headwinds from both structural change in the retail sector and weakening consumer sentiment. Furthermore, it says that footfall continues to grow, outperforming the relevant national index, whilst net rental income has proven to be very resilient. This is despite a steady flow of retailer failures. The impact of lower property valuation,s largely driven by negative sentiment towards regional retail assets, partially offset by positive valuation gains achieved across the company’s London portfolio. This led to a loss for the year of £25.6 million (December 2017: profit of £22.4 million).
Key highlights
The company has provided the following key highlights:
Adjusted Profit growth delivered against challenging market conditions
- Like-for-like2 Net Rental Income flat despite 20 CVAs and retailer restructurings which impacted 2018 NRI by approximately £1.5 million, or 2.9%
- Adjusted Profit1 up 4.8% to £30.5 million (December 2017: £29.1 million); Adjusted Earnings per Share1 up 3.2% to 4.23p (December 2017: 4.10p)
- IFRS Loss for the period of £25.6 million due to a fall in property valuations (December 2017: Profit of £22.4 million) driven by negative sentiment towards our regional retail assets which did not offset the positive valuation gains across our London portfolio
- Cost efficiencies delivered annual savings of £1.5 million in 2018 and total savings of £2.7 million from 2016, equating to c.25% of 2016 gross central costs
- A reduced final dividend of 0.60 pence per share (December 2017: 1.91p) preserving cash to fund capex investment and mitigate leverage while maintaining the Group’s REIT distribution requirements
Community shopping centre strategy delivering as expected
- Like-for-like2 footfall growth of 1.2% with 78.8 million shopper visits in 2018, once again significantly outperforming the national index which was down by 3.5%
- 87 new lettings and renewals achieved an average 3.1%3 premium to previous rents and a 1.5%3 premium to ERV
- Letting activity maintained a strong occupancy rate of 97%. (December 2017: 97.3%)
- £18.5 million of capex investment deployed delivering the remerchandising strategy. Key projects including Luton office refurbishment and delivery of flagship Ilford family precinct
- 25 year lease signed in February 2019 with Empire for new nine screen, state of the art cinema in Hemel Hempstead, anchoring transformation of its leisure offering and facilitating an investment of over £15 million in next two years
Long-term diversified debt structure at competitive pricing
- Group cost of debt of 3.27% with average debt maturity of 6.3 years4
- Basic and EPRA NAV per share, at 60p and 59p respectively (December 2017: both 67p), impacted by fall in property valuations at our regional assets
- Net LTV increased to 48% (December 2017: 46%)
- Restructured Group Revolving Credit Facility and Hemel Hempstead loan agreement to improve headroom