The shopping centre owner, C&R says it will not resume dividends until market circumstances improve.
C&R owns seven shopping centres, mostly around London. It said its local community strategy, focused on providing non-discretionary, essential goods and services, helped mitigate the impact on a relative basis. Last December, Growthpoint bought a 51% stake in the group through a combination of a partial offer for shares and a capital injection through a subscription for new shares. The transaction alleviated pressure on C&R’s balance sheet and boosted liquidity following a decline in the value of its centres.
While the current Covid-19 situation has placed pressure on leverage, we believe that the combination of the level of cash of approximately £80 million, largely maintained from the recapitalisation of the Group in December 2019; the measures agreed with our lenders; and the focus on local centres offering non-discretionary goods and services, provide a sound base for navigating the short to medium term,” chief executive Lawrence Hutchings said.
Net Rental Income (NRI) fell 36% to £16.2 million 25.2 million), largely as a result of Covid-19, driving a 69% reduction in adjusted profit to £4.6 million. It reported a loss of £116 million due primarily to a 16% fall in property valuations. Due to the current level of uncertainty and to maximise cash flexibility, it held back on an interim dividend and said it would maintain this position until market circumstances improved.
C&R said 605 stores, representing over 96% of units, were now operating, up from 68 stores in early May. Occupancy at its centres remained high at 95%, down from 97.2% in December. While footfall at its centres continued to be affected by Covid-19, it said it had outperformed the national index with visitor numbers improving by the day. After collecting 76% of rent for the first half of the year, it said collections for the third quarter were running at 54%, with over half of the outstanding balance due from well-capitalised national retailers. It completed 24 new lettings and renewals during the period with an encouraging leasing pipeline.
Considering the unparalleled circumstances of Covid-19, we believe the operating metrics delivered during the period are very strong on a relative basis and reflect the quality of the assets and the platform,” Growthpoint chief executive Norbert Sasse said. “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.
C&R said it had continued to make progress with important initiatives, including the submission of a planning application to convert its existing residential consent at Walthamstow into Build to Rent which would facilitate the introduction of a development partner. It also advanced discussions with the NHS for the introduction of a significant new healthcare centre at Ilford.
Its shares closed 1.2% higher at R15.68 in thin trade on Friday while Growthpoint added 0.9% to R12.34.
Main Image: GrowthPoint