Capital & Regional’s portfolio value drops 16% as losses widen to €130m

UK retail REIT Capital & Regional slumped further into the red in the first half of 2020, with losses widening to £115 mln (€130 mln) largely as a result of lower rental income and writedowns of £116 mln across its portfolio.

The company, which owns seven dominant in-town community shopping centres, posted a loss of £55 mln in the same period a year earlier. The value of the portfolio declined 16% to £611 mln in the six months to end-June 2020.

Capital & Regional said that while all of its centres have remained open throughout the pandemic, the government-enforced restrictions have impacted on the group's operations. ‘We are now working to better understand the long-term impact of the current uncertainties to determine the best approach for reducing debt levels and shaping the Group's future position to best capitalise on its strengths as an owner and manager of community shopping centres,’ commented CEO Lawrence Hutchings.

Norbert Sasse, chief executive of Growthpoint Properties which last December took a majority stake of 51% in the business, said that considering the unparalleled circumstances of Covid-19, ‘the operating metrics delivered during the period are very strong on a relative basis and reflect the quality of the assets and the platform’.

‘The pandemic has accelerated the underlying structural changes that were already taking place in physical retailing, but we believe the majority of C&R's portfolio of needs-based community centres remain well placed to prosper post a stabilisation in trading conditions,’ he said.

Net Rental Income (NRI) dropped by £9 mln to £16.2 mln in the first half of the year, down from £25.2 mln in the same period a year earlier, largely as a result of Covid-19.

In light of the current level of uncertainty and in a bid to maximise cash flexibility, the group has not declared an interim dividend and said that it will maintain this position until market circumstances improve.

At 30 June 2020 the group had total cash on balance sheet of £80 mln, which is equivalent to more than one year's gross revenue.

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