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Capital & Regional shares drop as shopping centres owner slashes its dividend as 2018 net income stalls

The FTSE 250-listed firm will pay a final dividend of 0.60p per share, down from 1.91p a year earlier, making a total payout for 2018 of 2.42p, down 34% from the 3.64p paid in 2017

Shopping centre
Capital & Regional said it wants to preserve cash to fund capital expenditure investment and mitigate leverage

Capital & Regional PLC (LON:CAL) saw its shares drop on Thursday as the shopping centres owner slashed its dividend as it saw its 2018 like-for-like net income stall as UK retailers continue to struggle.

The FTSE 250-listed firm, which owns seven shopping centres in the UK, said it will pay a final dividend of 0.60p per share, down from 1.91p a year earlier, making a total payout for 2018 of 2.42p, down 34% from the 3.64p paid in 2017.

READ: Capital & Regional in talks with struggling Debenhams about store re-sizing

The firm said it wants to preserve cash to fund capital expenditure investment and mitigate leverage, while at the same time meeting REIT dividend rules.

For the year ended 31 December 2018, Capital & Regional said its overall net rental income for 2018 rose by 0.6% to £51.9mln, while like-for-like net rental income was flat despite a $1.5mln hit after 20 company voluntary arrangements and restructurings from tenants.

The group’s adjusted 2018 profit rose by 4.8% to £30.5mln, but on an IFRS basis, there was a loss of £25.6, a swing from a £22.4mln profit a year earlier.

The company’s net asset value as at the end of 2018 was 60p, down 11% year-on-year, and its EPRA net asset value fell by 12% to 59p.

Capital & Regional pointed out, however, that footfall growth in 2018 was 1.2% on a like-for-like basis, "significantly" outperforming the national index's decline of 3.5%.

Hugh Scott-Barrett, Capital & Regional’s chairman commented: “This increase in underlying profitability has been achieved notwithstanding the headwinds from both structural change in the retail sector and weakening consumer sentiment.”

He added: "It is a strong endorsement of the strategy the company has been pursuing and is underpinned by robust operating and financial key performance indicators."

In late morning trading, shares in Capital & Regional were down 9.9% at 28.75p.

Quick facts: Capital & Regional PLC

Price: 37.6 GBX

LSE:CAL
Market: LSE
Market Cap: £42.04 m
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