No returns for Growthpoint as Capital & Regional holds dividend
Mall owner collected most of its rent in the first half and visitor numbers are improving, but conditions remain uncertain
SA’s largest real estate company, Growthpoint Properties, will have to wait for income returns from British community shopping centre owner Capital & Regional, of which its owns 51%, after the group chose to hold on to an interim dividend.
Growthpoint — which already had exposure to SA, Poland, Romania and Australia — acquired a 51.2% stake in the company at end-2019 for R2.9bn as it looked to invest in UK commercial property for the first time.
Capital & Regional is listed on the JSE and in London and its management team has been kept intact since Growthpoint invested in it.
Capital & Regional said on Friday that it opted to hold on to its interim dividend to preserve cash amid uncertainty due to the Covid-19 pandemic.
The group said 605 retail stores, or 96% of units, have reopened, but market conditions remained uncertain.
Capital & Regional owned seven community shopping centres worth £611.3m (R13,488.6m) at end-June, a 16% decline from end-December. The decline in the value of its property came amid Covid-19 and reduced levels of rent collection.
The group has collected 76% of its rent for its first half to end-June, with rent collection in the third quarter at 54%. “Over half of the balance of rent outstanding is due from well-capitalised national retailers,” the company said.
Its loss widened to £115.5m for the six months to end-June, from a loss of £55.4m in the prior comparative period.
“While all of our centres have remained open throughout the pandemic, the government-enforced restrictions have naturally affected the group’s operations,” said CEO Lawrence Hutchings.
“However our local community strategy — focused on providing non-discretionary, essential goods and services — has helped mitigate the impact on a relative basis,” he said. “Indeed, our strategy is now more relevant than ever as the structural changes in consumer habits that were already under way within the retail industry have been accelerated.”
When Growthpoint announced it would invest in Capital & Regional, group CEO Norbert Sasse said perceptions about British property are unrealistically low.
“There is a lot of value on offer in the UK. We are entering at a great point when perceptions about Brexit have weakened prices to very low levels. We feel that the UK is a very strong market that will rebound over time,” he said.
Growthpoint’s property assets are worth about R140bn, and more than a third of them by value are outside SA.
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