Capital & Regional, the UK convenience and community focused shopping centre REIT that yesterday reported strong interim results, plans a £25 million (R600.8m) open offer to help fund an acquisition.
The open offer, similar in many respects to a rights issue, will part-fund the planned acquisition of The Gyle Shopping Centre in Edinburgh, Scotland, for £40m.
Growthpoint Properties, which is also listed on the JSE and which holds a 62.7% stake in Capital & Regional, has fully underwritten the offer using debt facilities.
Capital & Regional CEO Lawrence Hutchings said their focus on value-orientated, non-discretionary and needs-based retail and services had driven a period of robust operational performance, against an uncertain and inflationary economic backdrop.
“Our footfall recovery, rent collection, occupancy and leasing metrics continue to benefit from … repositioning and remerchandising our centres, coupled with our continued focus on operations,” he said.
He said Snozone also enjoyed its first peak trading period unimpacted by Covid since 2019. “Combined, these factors have allowed us to deliver increases in adjusted profit and, in turn, dividend,” he said.
The interim dividend was raised 10% to 2.75 pence per share from 2.5 pence at the same time last year. Adjusted profit increased 19% to £7m.
He said also valuations continued to stabilise alongside income which, together with a maturing of the structural changes that had impacted physical retailing over the past five years, “have reinforced confidence in our portfolio, platform and UK community centres”.
He said the acquisition of The Gyle Shopping Centre in Edinburgh was the first step towards rescaling the business and leveraging skills and management expertise.
“Through this acquisition we are able to capitalise on an opportunity to add an established dual supermarket anchored community centre in Scotland’s capital city to our portfolio, in a transaction part-funded by a £25m equity raise available to all shareholders,” he said.
He said the centre would be accretive to income from day one, with the price representing a significant discount to the replacement cost and providing an attractive entry point “from which we can create value”.
Asset management opportunities offered by The Gyle Shopping Centre included refining the tenant mix, a renewed focus on leasing to improve occupancy and income, while enhancing the centre’s appeal to the growing and affluent catchment in south-western Edinburgh.
Capital & Regional saw 42 new lettings and renewals at a combined average premium of 5.7% to previous rent, reflecting continued occupier demand for space in the portfolio.
Occupancy continued to recover, increasing to 94.5% from 94.1% in December 2022 and 93.8% in June 2022. There were 19.3 million shopper visits during the six months, with footfall up 5.1% on the first half of 2022. Rent collection in line with historic pre-Covid levels, with 98.4% collected for the first half of the year.
BUSINESS REPORT