| Wed 25 Apr 2012, 8:00 | | CSO - Capital Shopping Centres Group Plc - Interim management statement for the |
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CSO
CSO
CSO - Capital Shopping Centres Group Plc - Interim management statement for the
period from 1 January to 25 April 2012
CAPITAL SHOPPING CENTRES GROUP PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: CSO
Issuer Code: CSCSCG
Capital Shopping Centres Group PLC
INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JANUARY TO 25 APRIL 2012
David Fischel, Chief Executive of Capital Shopping Centres Group PLC, commented:
"CSC is determined to provide the best experience to shoppers and to continue to
attract leading retailers to our prime regional centres, with 27 new stores
opening in the period. While the UK retail environment remains tough, we
continue to benefit from last year`s transformational Trafford Centre
acquisition as we focus on securing the right retailers in the right places
paying the right rents with the objective of achieving strong total returns from
our assets."
Highlights of the period
Tenant mix improvements:
* Exciting new brands brought to CSC centres including Nespresso at Trafford
Centre and Locker Room at Lakeside
* 42 new long term leases signed, in aggregate GBP10 million of annual rent,
around 10 per cent above previous passing rent and in line with ERV
* Active management initiatives driving change, particularly enhancing
catering and leisure offerings
* Progress with major projects:
* Lakeside - plans unveiled for a new leisure destination, in conjunction
with proposed 325,000 sq. ft retail extension
* Nottingham - OFT clearance, active discussions with retailers and local
authority
* Braehead - mall refreshment plans, preparation of masterplan continuing
* Acquisition of adjacent property at Cribbs Causeway with potential for
future development
* Operational indicators:
* Footfall down 2 per cent year to date outperforming the national average
* Tenants representing 3 per cent of rent entered administration, of which 2
per cent was reported at the time of the 2011 full year results in
February; occupancy 94.3 per cent, 95.0 per cent including tenants in
administration still trading
* Capital recycling:
* GBP49 million realised in March from part disposal of Equity One
shareholding
Tenant mix improvements
We have maintained progress during the period in respect of our long-
standing objective of ensuring the right blend of retail, leisure and
catering in all our centres. 27 new stores have opened in our centres since
Christmas including Nespresso at Trafford Centre, the UK`s third Locker
Room at Lakeside, Thomas Sabo at Braehead, Boux Avenue at Chapelfield and
Dwell at St David`s, Cardiff.
42 new long term leases have been agreed, in aggregate GBP10 million of
annual rent, approximately 10% above previous passing rent and in line with
ERV for those units. These include:
* Forever 21 to come to The Trafford Centre following the opening this autumn
of their flagship store at Lakeside
* A major global brand already trading in several CSC centres to double its
space at Manchester Arndale and to open in Harlequin, Watford, and The
Glades, Bromley
* Superdry to extend into an adjacent unit at The Trafford Centre and to open
in the former HMV store in Manchester Arndale
* Cafe Rouge to join Carluccio`s, Yo!Sushi and Ask in the rapidly developing
restaurant quarter at Chapelfield, Norwich
With a focus on creating a dynamic environment for shoppers and retailers,
in particular to meet demand for more catering and leisure attractions,
active management initiatives are underway at most centres, for example we
have:
* agreed terms with an operator, subject to planning permission, for a major
new leisure attraction at Barton Square, Trafford Centre
* agreed terms for the final letting at MetrOasis, a four restaurant
development at Metrocentre currently under construction and on schedule to
open in the autumn
* secured planning consent for a 58,000 sq. ft. leisure and catering
development at The Potteries, Stoke-on-Trent and are in advanced
negotiations with cinema and restaurant operators
* resubmitted an application for a fully pre-let terrace of five restaurants
at Queen`s Gardens, Bromley
Operational indicators
A number of factors contributed to a 2 per cent year on year reduction in
footfall at CSC`s centres for the year to date. By comparison, UK national
retail footfall as measured by Experian fell by 3 per cent year on year in
the same period. The three and a half month period is too short to enable a
conclusion to be made on the likely full year trend and we will report on
this measure again in July.
Occupancy across CSC`s centres stands at 94.3 per cent, down 2.4 per cent
from 31 December 2011 due to post Christmas tenant administrations (see
below) and expiry of seasonal lettings.
As we commented at our 2011 full year results, our focus is on securing the
right retailers in the right places paying the right rents with a view to
capital appreciation over the medium term. We believe that this robust
approach is appropriate for CSC even if it impacts vacancy levels, rental
income and void costs in the short term.
CSC is benefitting from shoppers` and retailers` increasing concentration
on the strongest destinations as our interests include ten of the UK`s top
25 shopping centres. Retailer demand for larger spaces for flagship stores
in the highest footfall locations remains strong, given the very limited
shopping centre construction pipeline in the UK.
Tenant administrations tend to be concentrated in the post Christmas
quarter. Some 3 per cent of CSC`s rent roll, 75 units, entered
administration in the first quarter of 2012. This includes the 2 per cent
which was reported at the time of the 2011 full year results in February.
Of the 75 units, 25 (1 per cent of rent) have been relet or are under
offer. The remaining 50 units plus failures from prior periods leave CSC
with 78 units (3 per cent of rent) currently let to tenants in
administration and treated as vacant in the 94.3 per cent occupancy rate.
Adjusting for the 18 of these units which are trading in administration,
occupancy is 95.0 per cent.
As long as the UK economy remains flat, we expect the letting environment
to continue to be challenging. However, due to robust evidence, we have
seen positive rent review settlements in the period, notably at Manchester
Arndale`s northern extension and for Lakeside`s department stores.
Progress with major projects
We continue to make good progress with major plans for organic growth:
* We are fully engaged in the planning process to obtain permission for our
proposed 325,000 sq. ft. expansion of Lakeside`s retail offer. In March, we
also unveiled plans for an exciting new leisure destination at Lakeside
comprising new cafes, restaurants, bars and leisure uses including family
entertainment venues and health and fitness facilities
* Our acquisition of Broadmarsh, Nottingham, received clearance from the
Office of Fair Trading in March, paving the way for discussions to start
with retailers regarding their appetite for upgraded space in the city. We
aim to bring forward proposals for complementary development of Broadmarsh
and our existing prime centre in Nottingham, Victoria Centre
* At Braehead, work has commenced on a full scale mock-up of the planned
visual improvements to the upper level. We continue to work with the local
authority on a master plan of a range of uses for the broader Braehead area
* At Cribbs Causeway, CSC and partner PruPIM have jointly acquired for GBP24
million the section of the neighbouring Centaurus Retail Park closest to
The Mall at Cribbs Causeway which we regard as having considerable
strategic potential. The initial yield on purchase price is 5.9 per cent
with an average unexpired lease term of 9.6 years
Capital recycling and financing
In March 2012 we disposed of around 4 million shares, just over a quarter of our
interest, in Equity One, a US REIT. The shares were obtained by CSC in early
2011 in exchange for our directly held US property interests. The proceeds of
GBP49 million will be reinvested in the group`s organic growth projects in the
UK. No tax was payable on the disposal. At the current share price and exchange
rate, our remaining interest in Equity One is valued at around GBP140 million.
At 31 March 2012 net external debt has reduced marginally to GBP3.3 billion and
the debt to assets ratio (based on 31 December valuations) was 48 per cent,
within CSC`s stated target range of 40 to 50 per cent.
Property valuations
Investor demand appears to be keeping prime yields stable for the highest
quality retail assets although demand has weakened for non-prime properties. As
a result, the IPD monthly index relating to all retail fell 1.1 per cent for the
first quarter.
The next independent valuation of CSC`s assets will be undertaken on 30 June
2012 and published with the first half results on 26 July 2012.
Conference call
A conference call for analysts and investors will be held today at 9.00 BST.
A copy of this press release 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 Head of Investor Relations +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
NOTES TO EDITORS:
Capital Shopping Centres is the leading specialist UK regional shopping
centre REIT.
Capital Shopping Centres Group PLC (CSC)
We own and operate some of the very best shopping centres, in the strongest
locations right across the country, attracting over 320 million customer
visits a year. Two thirds of the UK population live within a 45 minute
drive time of a CSC centre.
With over 16 million sq ft of retail space, valued at GBP7 billion, every
single one of the UK`s top 20 retailers are in our shopping centres,
alongside some of the world`s most iconic global brands.
Our five major out-of-town centres and nine in-town destinations include
ten of the UK`s top 25 shopping centres. Our out-of-town centres include
The Trafford Centre, Lakeside, Metrocentre, Braehead, and The Mall at
Cribbs Causeway, and our in-town prime destinations include Cardiff,
Manchester, Newcastle, Norwich, Nottingham, Bromley, Uxbridge, Watford and
Stoke-on-Trent.
In November 2011, we acquired Broadmarsh shopping centre in Nottingham
bringing our portfolio to 15 centres.
We are fully committed to supporting our local communities and the wider
environment through meaningful and hands-on initiatives.
For further information see www.capital-shopping-centres.co.uk
Sponsor:
Merrill Lynch SA (Pty) Limited
25 April 2012
Date: 25/04/2012 08:00:01 Produced by the JSE SENS Department.
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