Capital & Regional shares slide after tough year for retail

14th Mar 2019 10:53

(Sharecast News) - Shares in community shopping centre investor Capital & Regional were well into the red on Thursday morning, after the company announced its full-year results for the year ended 30 December.The London-listed real estate investment trust reported a 0.6% rise in its net rental income to £51.9m, while its adjusted profit was apparently ahead 4.8% at £30.5m and adjusted earnings per share improved 3.2% to 4.23p.On an IFRS basis, however, the firm swung to a loss of £25.6m for the year, from an IFRS profit of £22.4m in 2017.The board confirmed a 33.5% drop in its total dividend for the year to 2.42p.Capital & Regional's net asset value per share slipped 11% during the year, to stand at 60p at year-end, while its EPRA net asset value per share slid 12% to 59p.Group net debt widened by 1.8% to end the period at £411.1m, while its net debt-to-property value ratio increased to 48% from 46% a year earlier.On the operational front, Capital & Regional noted that its like-for-like net rental income was flat despite 20 company voluntary arrangements and retailer restructurings, which impacted 2018 net rental income by approximately £1.5m, or 2.9%.It said cost efficiencies delivered annual savings of £1.5m in 2018, and total savings of £2.7m from 2016, equating to around 25% of 2016 gross central costs.Like-for-like footfall growth was 1.2% for the year, with 78.8 million customer visits in 2018, which the board said "significantly" outperformed the national index, which was down 3.5%.It made a total of 87 new lettings and renewals during the year, achieving an average 3.1% premium to previous rents and a 1.5% premium to estimated recovery value.Capital & Regional maintained a "strong" occupancy rate of 97%, down slightly from 97.3% year-on-year, and reported that a total of £18.5m of capital expenditure investment was deployed in delivering its remerchandising strategy.Key projects included its Luton office refurbishment, and the delivery of its flagship Ilford family precinct."These operational results clearly support the new strategy we launched just over a year ago that is focused on responding to the structural changes currently underway in the retail sector," said Capital & Regional chief executive Lawrence Hutchings."The assets where we are most advanced in delivering our strategy have performed very strongly even in a challenging UK macro environment."This is evidenced by our footfall figures and our 87 new lettings and renewals which have on average been secured at premiums to both previous rents and ERV, while remaining at rent levels that are cost effective for occupiers."Hutchings said the firm had seen an increase in the pace of the structural change that was underway in the retail sector, which required the company to continue its "proactivity", with a focus on the repositioning and remerchandising of its assets while investing in its internalised management platform.That would ensure that Capital & Regional had the right skills and culture to respond effectively to the changes in the sector, Hutchings claimed."I remain confident that our strategy will realise the potential of our existing portfolio, which is underpinned by its bias towards high population growth areas in London and proximity to busy transport hubs."We continue to believe that the intersection of where product meets people remains of critical importance to brands and retailers and that our centres have a vital role to play as distribution platforms for goods and services."As at 1050 GMT, shares in Capital & Regional were down 9.57% at 28.85p.