Capital & Regional, the UK focused Real Estate Investment Trust (REIT), has today issued a valuation update prior to the announcement of its half year results later in the summer, showing a rise in the valuation of its portfolio and a strong operational performance.
Specialising in dominant in-town community shopping centres, Capital & Regional currently fully owns six of these assets in the UK which, as of the 30th June 2015, are valued at £791 million in total.
This valuation represents a 6.2 per cent increase on the 30th December 2014’s benchmark of £744.7 million, as the sector continues to perform well in the current economic climate.
The rise in value has been primarily driven by a net initial yield compression of 32 basis points, contracting from 6.27 per cent in December of last year to 5.95 per cent now. Not only does this further reflect the strength of the retail investment market, it also demonstrates Capital & Regional’s successful asset management strategy.
Capital & Regional chief executive Hugh Scott-Barrett believes that the update reflects the REIT’s determination to actively pursue excellent investment opportunities.
He says; “This increase in property valuations demonstrates the quality of our portfolio of dominant shopping centres and the important progress we have made with our long term capex investment plans.
“These plans, together with the work now underway at the newly acquired scheme in Ipswich, provide cause for a positive outlook on income growth, which is expected to drive future increases in valuations.
“Operationally, performance has been satisfying with Mall occupancy and contracted rent at 31 May 2015 higher than at the same date last year – this follows a period of strong letting and lease renewal activity, alongside which our tracking of retailers’ turnover is showing an encouraging trend and Mall footfall figures are in line with last year and ahead of our benchmark.”
Looking ahead, Capital & Regional expects to accelerate spending in the second half of the year, having spent £4.5 million during the first half primarily upon the large scale refurbishment of The Mall Walthamstow. This is largely due to a number of upcoming refurbishment and reconfiguration projects in the pipeline, namely those at its Maidstone centre and at The Mall Blackburn.
However, one of the largest projects is the redevelopment of The Buttermarket Centre in Ipswich, in which Capital & Regional holds a 50 per cent joint venture interest. The firm will invest a total of £12 million into the conversion of the primarily retail-based centre, which will gain a new cinema, several family restaurants and a number of larger units earmarked by major retailers including New Look.
