Capital & Regional in lease talks with Debenhams, sees value of malls declining
today Jan 25, 2019
Malls owner Capital & Regional (C&R) is in talks with Debenhams about the “right-sizing of stores” as the department stores operator continues with its plan to close up to 50 (or 90 if some reports are to be believed) of its locations.
The retail estate investment trust’s (REIT) trading update for the second half of the calendar year showed Debenhams accounting for almost 6% of its total income and renting 340,000 sq ft from it. That means losing the company’s stores completely would be a major blow, though it’s clear that being forced into a lower-rent or rent-free deal would also be a problem.
And it would come at a time when the only full-line M&S store in a C&R property (Luton) is also set for closure. But the company seemed upbeat on the prospects to let that space and said that "we have demonstrated our ability in re-merchandising former department store space with BHS and are advancing plans for the unit.”
The REIT wholly owns seven shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood Green and also has a 20% joint venture interest in the Kingfisher Centre in Redditch.
Overall retail weakness saw it reporting a 4.5% fall in the value of its portfolio to £855.3 million in H2 and the value of its property outside London fell 10.1%, underlining the challenging conditions at present.
But C&R’s update wasn’t all about bad news and there was plenty to suggest the business can thrive. It’s continuing to attract new tenants and occupancy edged up in H2. It also said that the value of its London trio of shopping centres actually rose 1.1%, reflecting the on-going buoyancy of retail in the capital and its suburbs.
And it said footfall to its centres rose 0.7% in the period, which means it beat the overall UK average of an almost-4% decline.
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