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LONDON: Capital Shopping Centres (CSC), Britain's largest mall-owner, said it was looking to increase its income from new longer-term tenants on higher rents as the UK retail sector bounced back from recession.
The retail property investor said on Thursday had been forced to agree shorter leases, which are under two years, to cope with a string of retail failures but expected to add 20 million pounds (RM101 million) to its income over the next two years as stronger tenants took over those properties.
"We're seeing good demand from quality retailers looking to expand their business ... particularly for larger shops and the catering units," CEO David Fischel told a conference call on CSC's first results since its split from Capital & Counties in May.
Fischel said demand for large units at its landmark malls, including Lakeside near London, came from such retailers as Associated British Foods' Primark, the UK's No.2 fashion chain Next, and electronics giant Apple.
At 0850 GMT, CSC shares were slightly up 0.6 pence at 340.6 pence, in line with the broader UK property stocks index.
UK retail sales grew at their fastest pace in three years in July and retailers were their most upbeat in six years about prospects in August, a survey showed, although some large retailers feared the impact of higher taxes and government cuts.
KBC Peel Hunt recommended its clients hold the stock, citing a likely impact from the UK's gloomy consumer spending outlook.
"The easy gains of passive yield shift have now come to an end, and as a result of CSC's exposure to retailer occupier markets, future performance may lag other leader stocks," KBC Peel Hunt analysts said in a note to clients.
Mall extensionsCSC, which owns 13 shopping centres in the United Kingdom totalling 13.8 million square feet, said would target further growth from about 500 million pounds worth of capital expenditure to extend three of its malls, and would not make any acquisitions.
"We are planning to grow on an organic basis with the assets we already have, through active management and some major extensions, so we're not actively searching for new assets to acquire," Fischel said.
Extension plans for the malls -- Lakeside, Victoria Centre in Nottingham and Braehead in Glasgow -- are currently in the feasibility stage, and the company is preparing to move them to a more advanced planning process, he said.
CSC said its diluted, adjusted net asset value per share improved 9 percent to 368 pence in the six months to the end of June, helped by a 6 percent rise the market value of its properties to 4.9 billion pounds.
Net rental income from continuing operations was up 1 percent, with occupancy at 98 percent, it said.
The REIT in May sold its US shopping centres unit to Equity One Inc for US$258.3 million, taking a stake in Equity One and a joint venture firm as part of the deal, in order to focus on its core UK businesses.
Capital Shopping Centres proposes an interim dividend per share at 5 pence, and plans to pay a total 2010 dividend 15 pence per share, in line with earlier guidance. -- Reuters
