Capital & Regional races to reduce debt
Capital & Regional said its underlying tenant business remained resilient in the first quarter with all indicators trading within their normal range.
Group debt at the end of March had been reduced from £270m to £114m, excluding £386m of debt secured on the German portfolio which is non-recourse, as it seeks to ensure it remains within its banking covenants against a background of declining property valuations.
At the end of March the group’s Mall portfolio was closes to breaking its covenants, with the loan to value (LTV) ratio (gross debt/property value) running at 59%, just one percentage point below the covenant threshold.
The LTV ratios on Junction and X-Leisure portfolios are running 7 and 8 percentage points respectively below the covenant thresholds.
The group has previously announced it is reviewing a number of options to reduce gearing on its Mall portfolio, and progress on an equity raising proposal at the Fund level is well advanced. Negotiations on assets sales are also in progress.
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A definitive statement on the solution to the Mall fund’s debt position is expected before the end of May.
Property valuations across the group's three funds fell by 4.75% in the first quarter, with the biggest fall registered in the Junction fund, which saw a 5.5% fall in ungeared value during the quarter. The Mall fund shed 4.5% and the X-Leisure fund dipped 2.5%.
The Junction’s tenant facing business had no tenant failures in the first quarter and vacancies remained unchanged at 5.18%.
Tenants in the group’s leisure sites are reportedly trading well.
“This difficult period for the sector is not yet over, and it is not yet clear where values will settle when confidence returns,” the group said.
