UK property still offers growth potential

Posted On Wednesday, 09 March 2011 02:00 Published by
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Capital Shopping Centres Group says the UK remains its key focus area in the near term, as it seeks to grow the size of its portfolio.

Capital Shopping Centres Group says the UK remains its key focus area in the near term, as it seeks to grow the size of its portfolio.

Addressing a media briefing in Johannesburg on Tuesday, finance director Matthew Roberts said there was still a lot of value to be extracted from central London, as the UK- and JSE-listed group geared to realise the full benefits of the Trafford Centre integration into its ranks. The centre was acquired in January from the Peel Group.

Asked whether the company had any growth strategies in the pipeline in Africa, Roberts said: "one cannot rule out the possibility of that happening in the future, but in the short to medium term, our focus is to grow our portfolio in the UK."

CSC is a specialist developer, owner and manager of pre-eminent UK regional shopping centres. It was formerly known as Liberty International.

Its name was changed in May 2010 upon demerging its central London activities into a newly listed company, Capital & Counties Properties.

As at January 28, the company owned 14 regional shopping centres, representing 16 million square foot of retail space with a valuation of £6.7 billion.

The group said the current estimated rental value of its existing centres by independent valuers was £354 million, compared with a passing rent and other income of £297 million, indicating a reversionary potential.

The Trafford Centre had an estimated rental value of £105 million, with the potential to increase rental levels from the limited potential supply of prime regional shopping centres, due to planning and economic factors, CSC said.

There was rising demand for CSC's flagship stores and catering space, with a structural shift in shopping patterns towards large centres with a strong catering and leisure offering.

The company also pinned its growth prospects on the opening of new space, such as St David's in Cardiff and Eldon Square in Newcastle.

"The potential to capture the additional 18% in annual rent arises primarily from lease expiries, especially of concessionary short-term lettings, which represent 2% of passing rent but 7% of ERV [estimated rental value], a £17 million opportunity," said CSC MD Kay Chaldecott.

"The upside potential was also to be derived from vacancies, in particular at St David's in Cardiff, which was expected to be fully let by the end of 2011. Rent reviews, especially department stores, were expected to benefit the group.

Chaldecott said the company aimed to create value through development and active management, including 1.4 million square feet of identified extension opportunities at existing centres.

"Extensions to existing prime locations carry attractive returns at the lower risk profile for CSC as developer than establishing a new destination."

Source: I-Net Bridge

Publisher: I-Net Bridge
Source: I-Net Bridge

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