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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good day, and welcome to the Capital & Regional conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Hugh Scott-Barrett. Please go ahead, sir.
HUGH SCOTT-BARRETT, CHIEF EXECUTIVE, CAPITAL & REGIONAL PLC: Good morning, everybody. This is Hugh Scott-Barrett, and with me is William Sunnucks, Finance Director of Capital & Regional. This is our first interim management statement. We've tried to be as fulsome and transparent as we can with regard to details, and that's certainly a commitment which we intend to live up to in future such statements. And you'll also see that we've included and integrated the April valuations within the IMS. What we've tried to do is to focus on operational performance across the key businesses, to set out the progress that's been made in terms of de-gearing across the Group in a clear objective to create additional financial flexibility, and to give you a clear sense of direction in terms of the steps being taken to put the Mall on a sound financial footing.
Let me just begin with a few observations about the operating performance of the business. I think that I and the management team are certainly realistic about the outlook for investment market conditions throughout the year, but I think it is important to emphasize that I think, once again, the management teams have demonstrated their ability to deliver in these difficult market conditions. And the underlying tenant facing businesses have been resilient. You see that in the ERV trend in first quarter, certainly in the Mall, a trend which certainly has continued in terms of positive ERV through April.
You also see it in terms of the income producing tenanted voids, a statistic which, obviously, has attracted quite a lot of interest from some of our peers in recent days. And I think, just to underscore the effective way in which the Mall management team in particular operate their business, it's worth pointing out that actually quarter end the total passing rent, subject to income producing tenanted voids, stood at GPB1.1 million, which I think puts in context and perspective some of the points that others are making with regard to the current operating environment.
And perhaps just one last statistic, again Mall-related, to emphasize the point, and something I see that a couple of you picked up on in the early reactions to our announcement, rent reviews in the Mall, some 44 rent reviews, GBP5 million of operating income, 1.94% of ERV. So I think that that at least should give you some sense, additional color, to the observations that we're making with regard to the resilience of the tenant facing business.
At the same time, we have taken steps to de-gear the balance sheet, both at the Group level and at the Fund level. And, in particular, I'd highlight the impact of the transactions at Group level, specifically fixed portfolio, and the impact that has in terms of Group debt, and the increased financial flexibility that, that provides. Not the last step because, as we've also indicated, we continue to look at ways to monetize our German portfolio, and continue to look at opportunities to realize value from some of the assets which are held on the balance sheet. At the same time, in the Junction, the impact of the disposal of the Great Western Retail Park in Glasgow is reflected in the LTVs that you see for the quarter end for at the Junction, which show it, a gross LTV at 53% compared to the 60% covenant level.
This then leads me on to the Mall. When we made our press announcement on May 1, we made it clear that we were looking at a number of different options with regard to the financial footing of the Mall. Those included but were not limited to assets disposals. As we've observed in today's announcement, we continue to negotiate with respect to those asset disposals, but we have identified that the way to put the Mall on a sound and more resilient financial footing, to create a more resilient financial structure, is through an equity issue at the Fund level. Now those discussions are well progressed. I would, however, like to say upfront that we've tried to do here is to give you a sense of direction, that's what we undertook to do on May 1, but more than that, at this point, I'm afraid I'm not going to be able to go into any more detail with regard to the nature or structure of that proposal but undertake to ensure that the market is properly informed by the end of the month in terms of the way forward.
I think before opening the floor to Q&A I'd, therefore, just like to summarize by saying, operationally, the business continues to perform well, and it reflects the management's focus on operational issues. We're realistic...
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