LONDON (ShareCast) - (Sharecast News) - Capital & Regional reported a strong ongoing recovery in an update on Thursday, saying that in the first four months of 2022, footfall was 193.3% of the same period last year.
The London-listed retail property investor said in total there were 18.4 million shopper visits, equating to about 76% of the footfall for the equivalent pre-pandemic period in 2019.

In the year to date, it said it had completed 34 new lettings and renewals for a combined value of £1.8m, ahead of previous rent and estimated rental value.

At Ilford, the company recently signed a lease agreement with the NHS for a new community healthcare centre on a 25-year lease term.

Capital & Regional said it would be a "flagship project", providing a new 20,000 square foot purpose-built facility that was expected to open in 2024.

Also at Ilford, it had agreed to relocate and upsize TK Maxx into a new 35,000 square foot store occupying the first floor of what was Debenhams.

The board said that would enable remerchandising of the existing TK Maxx unit, which sits at the entrance next to Ilford station, set to benefit from the impending opening of the Elizabeth line.

"The group has signed a package of amendments to its £39m secured loan facility in respect of the Exchange Centre, Ilford, to facilitate the investment of approximately £10m for the creation of the new community healthcare centre and anchor unit for TK Maxx," the board said in its statement.

"The amendments provide for a waiver of covenants until January 2023 and improvements to existing covenant terms to apply from January 2023 into 2024.

"The amendment also provides an 18-month conditional extension option that can be triggered at the end of 2023 to extend the loan maturity from March 2024 until September 2025."

Capital & Regional said overall occupancy had remained stable across its portfolio, at 93% at the end of April, while of the quarterly rent due on 25 March, it had so far received 93%.

The company had now received 96% of the rent due for the first quarter of the year.

At Walthamstow, Capital & Regional said it had now secured vacant possession of all units required to "unlock" the development site, while documentation with the local authority to facilitate the development was agreed and close to completion.

It said it expected to clear the remaining pre-conditions to enable transaction completion and release of the land receipt of £20m payable by its residential partner Long Harbour before 30 June, at which point it would hand over the site to allow them to start their development programme.

The company's indoor snow leisure operation Snozone, meanwhile, had recovered "well" after the start of the year was impacted by government restrictions, with trading in recent weeks exceeding the equivalent weeks in 2019.

"Since the start of the year, the group has continued to deliver strong operational results with footfall at almost double what it was for the same period last year and at the highest levels since the restrictions were put in place in March 2020," said chief executive officer Lawrence Hutchings.

"Leasing momentum has also been maintained, above both estimated rental values and previous rents on aggregate.

"We are also pleased to have reached a resolution with the lenders on the Marlowes Centre to acquire the debt, securing the long-term ownership of the centre for the group while also delivering a significant uplift to our net asset value."

Capital & Regional said it had agreed to acquire its debt over the Marlowes shopping centre in Hemel Hempstead at a "significant" discount, paying £11.8m in order to settle the loan and associated debt liabilities of about £24m, representing a 51% discount.

To partially fund the transaction, the group said it had "substantially agreed" terms on a new loan facility of £4m with BC Invest, a subsidiary of the group's strategic residential partner Far East Consortium.

The new debt would be provided for an initial three years at a margin of 5.95%, and would be secured on the Marlowes Centre on a non-recourse basis.

Capital & Regional said the rest of the proceeds would be funded by existing cash reserves.

"While inflationary pressures across the UK economy provide a challenging economic backdrop, we are seeing physical retail reaffirm its important place in the retail mix and signs of a shift in sentiment towards our sector, especially in needs based or non-discretionary community centres," Lawrence Hutchings said.

"This is evidenced by the progress we have made on specific group initiatives and a marked increase in investment market activity, coupled with our robust leasing and occupancy performance.

"These factors combine to provide us with cause for optimism and support plans to resume dividend payments in the second half of 2022."

At 0849 BST, shares in Capital & Regional were down 3.67% at 57.22p.

Reporting by Josh White at Sharecast.com.

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