Capital & Regional signs exclusive resi development deal with FEC

Capital & Regional has signed an exclusivity agreement with Far East Consortium to unlock residential development across its portfolio. The news came as Capital & Regional revealed that its net asset value per share has halved over the past year, falling to 113p at June 2021. The shopping centre-focused REIT has suffered from the rapid decline in in-town shopping centre values, with £250m wiped off the REIT’s value in the past 18 months. In the past six months the portfolio value fell 7.5% to £482.7m, knocking off a further £42.4m, on top of £208m lost in the previous year. The fall in valuations has also resulted in debt increasing to 72% of the group’s total. It is now keen to drive forward its residential development and move further away from being an in-town shopping centre specialist. Capital & Regional has already agreed a residential development sale to Aitch Group in Wood Green and is soon to conclude a £20m land sale of the Mall in Walthamstow to build-to-rent fund Long Harbour. The company owns five other shopping centres in Blackburn, Maidstone, Ilford, Luton and Hemel Hempstead. Capital & Regional and FEC will spend the next 18 months working to identify residential opportunities across the group’s shopping centre portfolio. FEC said it had already identified “two immediate potential opportunities” for residential development in C&R’s London portfolio. They aim to develop projects to boost the commercial asset value and also generate land receipts for Capital & Regional. The partnership will also examine where Capital & Regional could expand its community retail and services within FEC’s portfolio. Hong Kong-listed FEC is best known for its high-rise luxury residential with landmark schemes the £1bn Northern Gateway in Manchester and some of the tallest towers in London at Canary Wharf. It recently expanded to its first development with retail, at the redevelopment of the Sainsbury’s in Whitechapel. Chief executive Lawrence Hutchings said: “Both FEC’s and our own management team recognise the importance of sustainable mixed-use urban environments that enhance the sense of place and serve their local communities. The combination of our existing skills and resources will help to unlock further opportunities to create these across, and potentially beyond, our existing estate.” Contracted rent has fallen from £58m as of June last year to £51m, but 81% of rent for H1 had been collected, equating to £21.4m. Chris Hoong, managing director at FEC, said: “FEC has vast experience in delivering high-density schemes in the UK and working closely with local councils and boroughs. We have identified two immediate potential opportunities and will work closely with Capital & Regional to explore how we might jointly deliver high-quality residential properties within its London portfolio, which are already well served by existing retail amenities and transport links.” Hutchings added: “We have already demonstrated that residential can play an integral role in repositioning existing retail property, especially in Greater London, and are therefore pleased to formalise our relationship with FEC, having known the business well for several years. We believe this agreement is a further demonstration of our team’s ability to take a highly innovative approach to the management of our community centres and the potential our portfolio offers.”   To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Photo from Capital & Regional