Capital & Regional expects to maintain 5% dividend growth

Retail property group Capital & Regional expects to maintain full dividend growth of 5% for the full year, helped by continued growth of its UK retail assets.

CEO Lawrence Hutchings said the company, which released its results for the six months to June on Tuesday, wants to maintain dividend growth as this appeals to local investors who invest in the stock as a currency hedge.

The company, which owns community centres instead of large malls, achieved strong results in the under-pressure UK retail market.

“This is a robust set of results that demonstrates our strategy is delivering for our communities, our retailer customers and for our shareholders,” Hutchings noted. “We increased our adjusted profit and footfall, something which few other UK mall owners have been able to achieve, especially superregional mall owners,” he said.

Capital & Regional declared a 5.2% increase in its first-half dividend to 1.82p per share.

Pretax profits fell to £6.7m during the reporting period, compared with the £12.1m earned for the six months to June 2017, and the basic net asset value per share fell to 66p from 67p.

The group expects a knock to its rental income after 12 struggling national retailers or leisure operators across the UK applied for company voluntary arrangement, an insolvency procedure that allows heavily indebted companies to reach a voluntary repayment agreement with their creditors.

Some of those retailers are Capital’s tenants.

The short-term impact of company voluntary arrangements mean the full-year dividend growth in 2018 will be close to 5%, Hutchings said.

“This gives us the opportunity to remerchandise to offer essential goods at low prices.”

According to Hutchings, UK shoppers “are more and more interested in value retail right now and this is giving us momentum. They are not doing large monthly shops to freestanding supermarkets as much as they used to.

“Instead they go to convenience centres two or three times a week. This is helping our assets.”

He said large shopping centre landlords had found it harder to remerchandise their items.