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Interim Management Statement for the Period from 1 July to 6 November 2012
CAPITAL SHOPPING CENTRES GROUP PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: CSO
Issuer Code: CSCSCG
6 NOVEMBER 2012
CAPITAL SHOPPING CENTRES GROUP PLC
INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JULY TO
6 NOVEMBER 2012
Highlights of the period
• Operational indicators outperforming national benchmarks:
o Second consecutive quarter of improving year-on-year footfall trend
o Occupancy broadly steady at 96 per cent (30 June 2012 – 95 per cent)
• Tenant mix improvements driving retailer investment and footfall:
o New brands brought to CSC centres include Apple at The Harlequin, Watford and
The Glades, Bromley; Vivienne Westwood, A|X and Hamley’s at St David’s,
Cardiff; and Schuh Kids at Lakeside and Braehead
o 45 new long term leases signed, CSC’s share in aggregate £12 million of annual
rent, around 6 per cent above previous passing rent and in line with valuation
assumptions
• Progress with major projects:
o Continued programme of value-enhancing active management initiatives with
“MetrOasis” restaurant development opening in September
o Lakeside – planning consent secured for 325,000 sq. ft. retail extension
o Watford – terms agreed with local council for redevelopment of adjoining Charter
Place to create a combined 1.4 million sq. ft. regional destination
o Nottingham – close to agreement with local authority on the redevelopment of
Broadmarsh and its surroundings
• Strengthening the financial position:
o Issued £300 million 2.5 per cent 2018 convertible bonds which completed in
October and augmented the group’s cash and available facilities of £289 million
at 30 September
David Fischel, Chief Executive of Capital Shopping Centres Group PLC,
commented:
“Our prime UK shopping centres have recorded positive momentum with
steady footfall figures and the opening of 60 new stores and restaurants in the
period. We continue to make good progress on our pipeline of active
management projects and extensions which will ensure that our centres
continue to provide attractive destinations to consumers and retailers for the
long term.”
ENQUIRIES:
Capital Shopping Centres Group PLC
David Fischel Chief Executive +44 (0)20 7960 1207
Matthew Roberts Finance Director +44 (0)20 7960 1353
Kate Bowyer Head of Investor Relations +44 (0)20 7960 1250
Public relations
UK Michael Sandler/Wendy Baker, +44 (0)20 7796 4133
Hudson Sandler
SA Nicholas Williams, College Hill +27 (0)11 447 3030
Conference call
A conference call for analysts and investors will be held today at 9.00 GMT.
A copy of this announcement is available for download from our website at
www.capital-shopping-centres.co.uk
Introduction
The third quarter has been characterised by positive momentum in our centres, with some 60
new stores opening and stable occupancy. The on-going financial effects in the form of
vacancy and void costs of retailer failures at the end of 2011 and to date in 2012 will,
however, take some time to clear.
At the same time we have made considerable progress on our major development
opportunities. At Lakeside we have obtained a favourable planning decision for a long-awaited
retail extension. At Watford we now have agreement with the local authority over objectives
for an improved town centre retail and leisure offer. At Nottingham our discussions with local
stakeholders have progressed well.
We have also taken the opportunity of an improved corporate borrowing environment to
increase the group’s financial flexibility and broaden its sources of funding through a significant
convertible bond issue.
Operational indicators
CSC continues to benefit from shoppers’ and retailers’ focus on the UK’s stronger retail
destinations:
• We have achieved a second consecutive quarter of improved footfall trends in our
centres, with particularly encouraging increases in Manchester, Cardiff and Watford. For
the year to date, CSC’s footfall is now one per cent below that at the same point of
2011. By comparison, benchmark UK national retail footfall for the year to date as
measured by Experian is three per cent below that of 2011
• Occupancy across CSC’s centres is steady at 96 per cent (30 June 2012 - 95 per cent,
31 December 2011 – 97 per cent). By contrast, UK town centre shop vacancy remains
around 15 per cent according to the Local Data Company. We have successfully relet
the majority of the 131 units (6 per cent of rent) affected by tenant failures in the year
to date. However, 48 units (2 per cent of rent) still remain closed and in the hands of
administrators
• We have made good progress in addressing 2012 lease expiries and in managing in
advance those due in 2013. At the beginning of 2012 these amounted to 11 per cent
and 10 per cent respectively of the Group’s rent roll
Tenant mix improvements
Some 60 new stores have opened in our centres since June including 6 new brands opening in
a CSC centre for the first time. In a significant demonstration of commitment, tenant
investment in these and other stores across the portfolio amounts to over £50 million for the
year to date.
45 new long term leases have been agreed, in aggregate £14 million of annual rent (CSC’s
share £12 million). Overall the new terms represent a 6 per cent increase from previous
passing rent for those units and are in line with valuation assumptions. These include
significant new UK and international brands and established retailers up- and down-sizing to
create their optimal format, for example:
• Victoria’s Secret - to open at The Trafford Centre in mid 2013, their first UK store
outside London
• Next at The Trafford Centre, Ernest Jones at Lakeside and H&M at The Chimes,
Uxbridge – all upsizing and part of a continuing trend of unit consolidation to meet
strong tenant demand for larger format stores
• L’Occitane – now open in Eldon Square, their first store in Newcastle city centre and
Office, opening their largest store in the North
• Thomas Sabo – open at Victoria Centre, Nottingham, and coming soon to Chapelfield,
Norwich
Active management and organic growth opportunities
CSC’s business model starts with a focus on the consumer with the objective of providing
compelling destinations. We estimate that we attract some 30 million individual visitors per
annum who are increasingly knowledgeable about the range of channels available to them and
look to our centres for the ideal combination of product, experience and service.
Our active management projects and major extension plans are focused on providing the right
mix of global and top UK retail brands alongside the best places to eat and socialise.
• Active management projects include the following:
o At Braehead we have completed our refreshment of the upper mall, introducing
retailer-branded double-height panels, new lighting and better sight lines. The
fresh feel will be reinforced by new catering concepts opening before Christmas
o At The Trafford Centre, work has started in Barton Square to create a Sealife
Aquarium attraction near to the LegoLand Discovery Centre and planning
consent has been granted for 93,000 sq. ft. of additional retail space on the
upper level
o At Metrocentre, we are creating a new “Platinum” mall, bringing a more
aspirational feel to the brands on offer and the dining experience. The 360
Champagne Bar and Mamas & Papas have opened, with more new names to
come before Christmas. Recent lettings have demonstrated good growth in
restaurant rental levels
• At Lakeside, having secured planning consent we are reviewing options for compelling
new attractions in the retailer mix. Subject to signing up an appropriate level of pre-
lets, we could be on site in 2014. We are also working on plans for a new leisure
destination at Lakeside comprising new cafes, restaurants, bars and various leisure
uses
• At Watford, the adjoining Charter Place offers us the opportunity to develop over
320,000 sq. ft. to meet unsatisfied demand in the town centre for larger format units
appropriate for flagship stores and to rectify the limited catering and leisure offer in the
town. We expect to make a planning application in early 2013 and the new destination
could be open when the Metropolitan underground line extension completes in 2015
• At Nottingham, the City has potential to offer one of the UK's finest shopping
experiences. Discussions between CSC and Nottingham City Council have progressed
well and are now focused on achieving heads of terms for a development agreement
which will enable a core scheme to be progressed at Broadmarsh. At Victoria Centre,
refurbishment options for the interiors are being developed with architects and the
planning application for the Northern Extension remains with the Council.
• We have acquired for £2.8 million a 17 acre property adjacent to Metrocentre with
potential for future development
Financing
On 20 September the group announced the issue of £300 million 2.5 per cent convertible
bonds due 2018. Settlement took place in October. We regard the convertible bond as a
positive component of the group’s overall capital structure.
At 30 September 2012 net external debt had increased marginally to £3.5 billion and the net
debt to assets ratio based on 30 June 2012 valuations was 49.5 per cent. On a pro forma
basis, were the convertible bonds to convert into equity, the net debt to assets ratio would
reduce to 45 per cent.
Property valuations
We continue to see a good level of interest from investors for the highest quality retail assets
which is keeping yields firm and underpinning valuations. By contrast, demand continues to
weaken for non-prime properties, with capital values according to the IPD monthly index
relating to all retail falling by 1.3 per cent for the third quarter, 4.2 per cent for the year to
date (CSC six months to 30 June 2012 – no change).
The next independent valuation of CSC’s assets will be undertaken on 31 December 2012 and
published with the results for 2012 on 27 February 2013.
Sponsor:
Merrill Lynch South Africa Proprietary Limited
NOTES TO EDITORS:
Capital Shopping Centres is the leading specialist UK regional shopping centre REIT.
We own and operate many of the very best shopping centres, in the strongest locations right
across the country, attracting over 320 million customer visits a year. We estimate that half of
the UK population, some 30 million people, visit a CSC centre every year and two thirds live
within a 45 minute drive time of one of our centres.
With over 16 million sq ft of retail space, valued at £7 billion, every single one of the UK’s top
20 retailers is in our shopping centres, alongside some of the world’s most iconic global
brands.
We own ten of the UK’s top 25 shopping centres including The Trafford Centre, Lakeside,
Metrocentre, Braehead, and The Mall at Cribbs Causeway, and in-town prime destinations such
as Cardiff, Manchester, Newcastle, Norwich, Nottingham, Bromley, Uxbridge, Watford and
Stoke-on-Trent.
In November 2011, we acquired Broadmarsh shopping centre in Nottingham bringing our
portfolio to 15 centres.
We are fully committed to supporting our local communities and the wider environment
through meaningful and hands-on initiatives.
For further information see www.capital-shopping-centres.co.uk
This announcement contains “forward-looking statements” regarding the belief or current expectations of Capital Shopping Centres
Group PLC, its Directors and other members of its senior management about Capital Shopping Centres Group PLC’s businesses,
financial performance and results of operations. These forward-looking statements are not guarantees of future performance. Rather,
they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of
which are outside the control of Capital Shopping Centres Group PLC and are difficult to predict, that may cause actual results,
performance or developments to differ materially from any future results, performance or developments expressed or implied by the
forward-looking statements. These forward-looking statements speak only as at the date of this announcement. Except as required by
applicable law, Capital Shopping Centres Group PLC makes no representation or warranty in relation to them and expressly disclaims
any obligation to update or revise any forward-looking statements contained herein to reflect any change in Capital Shopping Centres
Group PLC’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is
based.
Any information contained in this announcement on the price at which shares or other securities in Capital Shopping Centres Group PLC
have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future
performance.
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