| Mon 31 Oct 2011, 9:00 | | CSO - Capital Shopping Centres Group Plc - Interim Management Statement for |
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CSO
CSO
CSO - Capital Shopping Centres Group Plc - Interim Management Statement for
the period from 1 July To 31 October 2011
CAPITAL SHOPPING CENTRES GROUP PLC
(Registration number UK3685527)
ISIN No.: GB0006834344
Issuer Code: CSCSCG
JSE Code: CSO
CAPITAL SHOPPING CENTRES GROUP PLC
31 October 2011
INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JULY TO 31 OCTOBER 2011
Capital Shopping Centres Group PLC today announces its interim management
statement for the period from 1 July to 31 October 2011:
David Fischel, Chief Executive of Capital Shopping Centres Group PLC,
commented:
"As evidenced by a 97 per cent occupancy level, CSC has delivered a robust
operational performance in the period in the face of a challenging economic
and retail background. CSC remains well positioned through its focus on
leading and high quality regional shopping centres in the UK."
Highlights of the period
- Operational indicators
- Continued strong occupancy level at 97 per cent
- July to October footfall in line with 2010, up 2 per cent year to
date
- 56 new long term leases in Q3 increasing annual passing rent for
those units by GBP3 million
- Active management projects underway across CSC`s centres
- Major retailer openings at Trafford Centre & Braehead
- Reorganisation of management structure
Retail and property background
Prime retail destinations offering a broad leisure and catering experience as
well as the full range of comparison retail, such as those owned by CSC, have
continued to perform robustly in terms of lettings, occupancy and footfall.
Strong brands and international retailers continue to favour CSC`s high
footfall destinations for their flagship outlets, with key openings in the
period including Banana Republic at Trafford Centre and both Apple and
Hollister at Braehead, a combination now in six of CSC`s centres.
CSC is focused on the UK`s top centres with the overall quality evidenced by
a vacancy rate of 3 per cent and by positive footfall figures. By comparison
the UK retail average vacancy is 14 per cent and Experian data for UK
national retail footfall indicates a decline of 1 per cent for the year to 30
September 2011. We believe CSC is well placed to benefit from the structural
change in UK retail being driven by economic headwinds and changing consumer
behaviour and technologies.
Our asset management teams work proactively to manage our tenant mix and
provide space for successful and expanding retailers while downsizing those
who are struggling. We are also actively engaging with retailers to ensure
that CSC`s centres participate in the shift towards e-commerce for example
through collection centres, social networks and other marketing initiatives.
The UK retail environment, which had become more difficult in the second
quarter of 2011 reflecting the low growth in the wider economy, showed no
improvement in the third quarter. Consumer confidence indices have fallen to
low levels as discretionary spending power has
come under considerable pressure with inflation outpacing salary increases.
National retail sales statistics (BRC) for the third quarter indicated a 1.4
per cent decline in like-for-like non-food sales, the fifth consecutive
quarterly decline.
The IPD UK monthly index (retail) showed a 0.2 per cent capital decline in
the three months ended 30 September 2011 (1.1 per cent surplus in the six
months ended 30 June 2011). Indications are that yields for the most prime
assets are stable to slightly tightening, while those for secondary assets
are coming under some pressure as the implications of retailer failures and
store rationalisation programmes are digested.
Operational indicators
- Occupancy remains high at 97 per cent (30 June 2011 - 97 per cent)
- Footfall in CSC`s centres grew 2 per cent year on year for the ten
months to 31 October. After three years of consistent increases,
footfall in the four months to 31 October was marginally higher than the
strong comparatives from 2010
- 56 new long term leases were signed in the quarter generating GBP9m new
rent, an increase of GBP3m from previous passing rent and in aggregate
at 90 per cent of ERV (year to date 136 lettings, an increase of GBP7m,
at 95 per cent of ERV)
- Generally we continue to see strong demand and rental growth for large
stores and catering units while smaller stores, which comprise the
majority of the short term leases referred to below, remain a difficult
market. In the third quarter just 6 of the 56 lettings accounted for
most of the shortfall from ERV
- Of CSC`s 2,300 units, 7 were affected by tenant failures in the quarter
(0.2 per cent of rent). The total for the year to date is a relatively
low 68 units, 2 per cent of rent (2010 full year 46 units, 1 per cent of
rent)
- At 30 September 2011, CSC had 243 short term leases representing 3 per
cent of passing rent (30 June 2011 - 240 representing 3 per cent of
passing rent)
Major assets - activity and value creation
- At Trafford Centre, a series of openings has further improved the retail
offer. M&S and Debenhams have opened extensions to their stores, Dune
has opened a new flagship store and Banana Republic has opened its first
stand alone store north of London
- At Lakeside, Choice and Bhs have opened new concept stores, Top Shop /
Top Man is on schedule for a pre-Christmas opening and enabling works
have commenced for the "roof box" extension to create a new flagship
store for Forever 21 to open by Christmas 2012. We anticipate filing a
planning application before Christmas for the proposed major extension
which is currently undergoing public consultation
- At Metrocentre, Primark`s new 60,000 sq. ft. flagship store opened
earlier this month along with the first stores in the North East for
Boux Avenue and The Entertainer. M&S will complete a major re-fit of
its store prior to Christmas. Construction of "MetrOasis", a 15,000 sq.
ft. terrace of retail and catering of which 75% is under offer, is on
schedule to start next month
- At Braehead, the three new restaurants on the former "Fun Ice" are now
open and trading well. Two major new brands to the centre are both now
open, Apple and Hollister, substantially strengthening the centre`s
tenant mix. Building on this success, we anticipate undertaking internal
mall enhancements in early 2012 and continue to work with the local
authority on a long term masterplan for the area
- At Nottingham, we remain confident of a pre-Christmas determination of
the planning application for the Northern Extension
- At St. David`s, Cardiff, two years after opening just 9 of the 160 new
units are available of which 4 have agreed heads of terms. The 151 units
open or committed represent 90 per cent of the anticipated income of the
extension. Recent signings of retailers new to Wales include Calvin
Klein, Cath Kidston, Vans, North Face and Gilly Hicks
- At Bromley, a planning application is shortly to be made for five
restaurants in Queen`s Gardens following a well supported public
consultation and strong demand from catering operators
- Our US investment, Equity One, has undertaken a material disposal of non-
core assets and has secured a new increased revolving credit facility,
both of which have been viewed positively by the market
Financing
At 30 September 2011, net external debt was GBP3.3 billion and the net debt
to gross assets ratio was 48 per cent based on 30 June 2011 property
valuations, unchanged from 30 June 2011 and within CSC`s stated target range
of 40 to 50 per cent. The recent financial market uncertainties have further
reduced interest rate expectations, illustrated by a 74 basis points
reduction between 30 June and 24 October in the sterling LIBOR seven year
swap rate to 2.29 per cent.
Change in management structure
As previously announced, Kay Chaldecott stood down as Executive Director of
CSC on 30 September 2011 after 27 years with the Group. Kay has been a
dedicated member of the executive team and played an instrumental part in the
development and success of the Group`s shopping centre business. We are
delighted that Kay has agreed to provide consultancy services to the Group.
CSC has appointed Mike Butterworth as Chief Operating Officer reporting to
David Fischel, Chief Executive, and responsible for operations, asset
management and development activity across all 14 of CSC`s centres. Mike was
Managing Director of Trafford Centre Limited for 15 years until its
acquisition by CSC in January 2011 when he took responsibility for a further
three of the Group`s centres. We are pleased to have within the Group someone
of Mike`s considerable experience and ability to take on this role.
Other
As stated in our results for the half year to 30 June 2011, we have been
considering the introduction of a scrip alternative for future dividends
following a change in the rules governing UK REITS. We anticipate seeking
shareholders` approval at our 2012 AGM for the introduction of a scrip
alternative which, subject to Board discretion, will apply to the 2011 final
and subsequent dividends.
The Board has noted the recommendations of the Davies Report "Women on
Boards" and intends to achieve a minimum of 25% female representation by
2015.
Prospects
We continue to expect a low growth environment, a challenging retail market
and a restricted financing market for real estate for some time in the UK,
with the Eurozone crisis creating more uncertainty and impacting investment
decisions. We are reassured however by the sound positioning, robust
operational performance and defensive financial structure of CSC`s business.
Conference call
A conference call for analysts and investors will be held today, 31 October
2011, at 9.30 GMT.
A copy of this announcement is available for download from our website at
www.capital-shopping-centres.co.uk.
ENQUIRIES:
Capital Shopping Centres Group PLC:
David Fischel Chief Executive +44 (0)20 7960 1207
Matthew Roberts Finance Director +44 (0)20 7960 1353
Kate Bowyer Investor Relations Manager +44 (0)20 7960 1250
Public relations:
UK: Michael Sandler, Hudson Sandler +44 (0)20 7796 4133
Wendy Baker, Hudson Sandler +44 (0)20 7710 8917
SA: Nicholas Williams, College Hill +27 (0)11 447 3030
Sponsor:
Merrill Lynch SA (Pty) Limited
NOTES TO EDITORS:
Capital Shopping Centres is the leading specialist UK regional
shopping centre REIT
Capital Shopping Centres Group PLC (CSC) is the UK`s leading
specialist developer, manager and owner of pre-eminent regional
shopping centres. With a portfolio of 14 centres representing 16
million sq ft of retail space and a valuation of GBP6.9 billion
CSC`s assets attract well over 300 million customers a year.
CSC`s assets comprise five major out-of-town centres including four
of the UK`s top six - Trafford Centre, Manchester; Lakeside,
Thurrock; Metrocentre, Gateshead; Braehead, Glasgow and The Mall at
Cribbs Causeway, Bristol - and nine in-town centres including
centres in prime destinations such as Cardiff, Manchester,
Newcastle, Norwich and Nottingham.
With a dedicated and skilled management team CSC aims to be the
landlord of choice for retailers and to provide compelling
destinations for shoppers. It is a responsible and environmentally
conscious participant in the communities where it invests.
In April 2011 CSC was recognised as the UK`s Top Shopping Centre
Investment Manager in Going Shopping 2011 -- The Definitive Guide to
Shopping Centres published by Trevor Wood Associates.
For further information see www.capital-shopping-centres.co.uk
This announcement contains "forward-looking statements" regarding
the belief or current expectations of Capital Shopping Centres
Group PLC, its Directors and other members of its senior
management about Capital Shopping Centres Group PLC`s businesses,
financial performance and results of operations. These forward-
looking statements are not guarantees of future performance.
Rather, they are based on current views and assumptions and
involve known and unknown risks, uncertainties and other factors,
many of which are outside the control of Capital Shopping Centres
Group PLC and are difficult to predict, that may cause actual
results, performance or developments to differ materially from any
future results, performance or developments expressed or implied
by the forward-looking statements. These forward-looking
statements speak only as at the date of this announcement. Except
as required by applicable law, Capital Shopping Centres Group PLC
makes no representation or warranty in relation to them and
expressly disclaims any obligation to update or revise any forward-
looking statements contained herein to reflect any change in
Capital Shopping Centres Group PLC`s expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based.
Any information contained in this announcement on the price at
which shares or other securities in Capital Shopping Centres Group
PLC have been bought or sold in the past, or on the yield on such
shares or other securities, should not be relied upon as a guide
to future performance.
---ENDS---
Date: 31/10/2011 09:00:19 Produced by the JSE SENS Department.
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