Capital & Regional trim losses as property valuations recover

Capital & Regional, which owns a portfolio of community shopping centres in the UK, narrowed its losses in the year to end-December as property valuations showed signs of stability.

The UK property developer steadily emerged from the clutches of the Covid-19 pandemic and consequent lockdown restrictions, which have had a significant effect on rental income.

“As we look forward towards navigating a path of recovery, it is comforting to see greater clarity emerging in our operating environment, especially around digital disruption and the impact of online retailing,” CEO Lawrence Hutchings said in a statement.

“This has helped foster the beginnings of a change in sentiment towards the sector, which is reflected in the fact that valuations are stabilising, with two quarters of broadly flat capital values in the second half of last year marking the first time without a fall in valuations for four years.”

Losses for the period narrowed to £26.4m from £203.9m the year before. However, net rental income declined to £29m from £34m.

Property valuations stabilised in the second half of 2021, with the investment assets portfolio marginally increasing in value to £380.1m from £377.2m as of June 2021 after a 6.4% decrease in the first half of 2021.

Capital & Regional opted not to declare a dividend in light of high net debt relative to property assets, which stood at 49%, though it was a lot better compared to 65% during the prior comparative period. About 40% is considered by fund managers to be the limit above which financial stress is felt on a balance sheet.

By the JSE’s close on Tuesday the company’s share price was down 2.67% to R11.68, leaving it with a market capitalisation of R1.932bn. The share price has fallen 87% over the past five years.

mahlangua@businesslive.co.za