CapReg posts income growth as values rise

Community shopping centre owner Capital & Regional has recorded like-for-like growth in values and rental income, with solid occupier demand cited as a key driver. Revenue grew to £59m in the year ending December 2023, from £56.8m in the previous year. Net rental income rose by 5% to £23.9m. CapReg said like-for-like valuations were up by 2.6% over 2023. The value of the owner’s portfolio grew by 15.5% to £372m, including its acquisition of Gyle shopping centre in Edinburgh, which it bought in September last year. The owner pointed to a 4% increase in Gyle since purchase, primarily stemming from completing six new lettings and renewals. NAV has increased by 12.8% to £202m, compared with £179.1m in 2022. NAV per share and EPRA NTA per share shrank to 90p and 88p respectively, owing to an increased number of shares in issue after a £25m equity raise last year. Occupancy inched down to 93.4%, from 94.1%, on the back of Wilko’s administration. However, all three stores vacated by the retailer have been relet post year-end. Chief executive Lawrence Hutchings said: “Occupier demand coupled with our accretive capex programme has driven rental growth, underpinned a 9.7% increase in earnings and, with values also up slightly, given us the confidence to increase the dividend. “The structural changes in retail continue to evolve, with online penetration now maturing and a continued return to the store by consumers meaning physical retail has cemented its position as a vital part of the distribution framework.  This is especially evident in our core categories of value and non-discretionary merchandise. Retailers are continuing to focus on coupling the online platform with stores in a seamless guest experience. “The rapid re-leasing of all three of our Wilko units to B&M in the first few months of 2024, further demonstrates the quality of our locations, the relevance of our strategy and our team’s ability to capture demand from retailers for affordable space in urban locations. “This backdrop, coupled with the improvement in our underlying operational business, and with the company’s balance sheet stable, gave us the confidence to proceed with the Gyle acquisition in September 2023.  It marks our first step towards rebuilding the business through our continued capex programme and a disciplined approach to opportunities to buy well positioned retail-led real estate at attractive entry points.”