Chairman's Statement

Performance Overview 

Capital & Regional’s strong performance in 2016, against a background of increased economic uncertainty, has demonstrated the resilience of the business model.  This has led to an 8.7% increase in the dividend to 3.39p for the full year, delivering an attractive dividend yield to shareholders.   

I am pleased to report that Adjusted Profit increased by 11.7% to £26.8 million.  This is an excellent result in a year where, building on the solid foundations we have successfully created over the last few years, our focus shifted decisively towards boosting income from delivery of the asset management and development initiatives across the portfolio.  The performance is all the more creditable as, during the course of the year, the BHS administration, while providing a medium-term opportunity to create value and improve the tenant mix, did inevitably result in a short term-loss of income.

NAV per share as at 30 December 2016 was 68p compared to 72p at the beginning of the year.  This reflects the impact of one-off costs associated with the successful long-term refinancing of the Group’s core banking arrangements, the impact of stamp duty increases as well as the modest fall in valuations since the EU referendum in June 2016. Whilst the EU referendum vote did slow investment activity, the core portfolio has proven to be very resilient with valuations adjusted for capital expenditure down only 2%, supported by a steady volume of transactional evidence for assets in London and the South East.

IFRS profit for the period fell from £100 million to a loss of £4.4 million.  This reflected a non-cash revaluation loss, for the reasons noted above, partially reversing the strong unrealised valuation gain recognised in 2015, together with the £11 million charge in relation to implementing the new long-term debt structure.


Capital & Regional creates value for shareholders through a focus on increasing income and capital growth from entrepreneurial asset management initiatives on its portfolio of shopping centres.  As we have successfully demonstrated, once assets have been repositioned we seek opportunities to recycle them if we believe capital can be more effectively employed on new investments or other asset management initiatives. Our portfolio offers both resilience and significant opportunities for growth.  Our centres combine the scale and dominance of prime shopping centres with the convenience and affordability of town centres.  The portfolio is increasingly weighted to London and the South East where the demographics are strong and we see healthy demand from both retailers and leisure operators for affordable space and opportunities for alternative use remain attractive.  The uplift in rents that has been achieved from the re-let BHS space in Walthamstow and Blackburn highlights the income potential that can be unlocked from this portfolio, as well as the strong occupier demand for space within it.

Following a very successful investment in Lincoln, which was sold in 2014, the Company has again demonstrated its ability to generate capital gains through the redevelopment and repositioning of assets, with the sale of its Ipswich joint venture which completed in February 2017.  The centre was acquired in March 2015 and through significant investment and imaginative asset management repositioned as a vibrant leisure and retail destination, delivering an IRR of over 40% on exit.  The progress the Company is making in Hemel Hempstead on plans to transform the town centre provides another opportunity to grow both income and create attractive capital gains as does Ilford, following the acquisition of The Exchange centre in March 2017. 

We believe that the key characteristics of the underlying assets within the whole portfolio leave us well positioned to sustainably grow earnings further. 


Capital & Regional’s strong performance in 2016, against a background of increased economic uncertainty, has demonstrated the resilience of the business model. This has led to an 8.7% increase in the dividend to 3.39p for the full year, delivering an attractive dividend yield to shareholders.


John Clare CBE

Responsible Business

We have reduced our energy consumption by 5% over the course of this year and our continuous year-on-year improvement has been recognised by the award of Best in Carbon Management at the Carbon Trust Awards, ranking Capital & Regional first amongst 150 companies in the UK.  Our expertise not only helps reduce our environmental impact but also enables us to deliver measurable savings to our occupiers through a very competitive service charge.

We have also intensified the training of our operational teams to ensure staff are prepared for any potential threat.  Our centre teams have implemented scenario planning and conducted exercises in conjunction with local emergency services.

The award of a 10th consecutive ROSPA Gold award underlines our continued focus on health and occupational safety standards across the shopping centres.



For 2016, the Board is proposing a final dividend of 1.77 pence per share taking the full-year dividend to 3.39 pence per share, representing an increase on 2015 of 8.7%.  This is ahead of guidance, which targets annual dividend growth in the range of 5-8% in the medium-term.  The Board is reaffirming its commitment to this guidance reflecting its confidence in the income growth prospects for the business underpinned by our asset management programme.



As in previous years, I would like to thank all who work at Capital & Regional for their hard work during the year.  I would, in particular, like to celebrate the efforts of those in the shopping centres who have become Customer Hosts and who have done so much to welcome our visitors and who have selflessly acted to improve the quality of the service we provide to our shoppers.  I would also like to congratulate all Snozone staff whose efforts in promoting customer service led to being shortlisted alongside Manchester United and Twickenham Stadium for the School Travel Award.


The Board

I am delighted to welcome Guillaume Poitrinal who joined the Board on 1 November 2016.  Guillaume is one of the most well regarded figures in European real estate and brings with him a wealth of highly relevant experience and knowledge of the shopping centre sector which will be of great value to the Company. 

Mark Bourgeois stepped down from the Board on 1 November 2016 after 18 years at Capital & Regional.  On behalf of the Board, I would like to thank Mark for his hard work and significant contribution to the Group’s recent success and we wish him well for the future.

The Board has focused much attention on senior management succession planning during the course of the year, seeking to balance the introduction of new talent with continuity.  Both Hugh Scott-Barrett and I have indicated a desire to step down from our current roles in 2017 after, respectively, nine and seven years of service.  I am therefore delighted that Lawrence Hutchings, who is a highly experienced and well regarded retail real estate professional, will join in June 2017 as Chief Executive and Hugh Scott-Barrett will take up the role of Non-Executive Chairman, at which point I will retire.

I would like to thank my Board colleagues for all their support and guidance over the last seven years.  I am pleased to leave the Company in such a strong position; it has been a privilege to have been Chairman of Capital & Regional during a time of such significant progress. 

John Clare CBE

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