Our opinion on the current state of CAPREG(CRP)

Capital and Regional (CRP) is a UK real estate investment trust (REIT) which owns and manages in-town community centres in England. Obviously, both the UK consumer and property owners in the UK have been depressed by the advent of Brexit and then COVID-19, which have lowered footfall traffic and caused some retailers to go into the British equivalent of business rescue. A massive GBP77.9m injection by Growthpoint gave it 51.2% of the business. The share has been trading at a significant discount to its net asset value (NAV) but jumped on the news of the takeover by Growthpoint.

In its results for the year to 30th December 2023, the company reported footfall up 1.5% and occupancy at 93.4%. Rental collections were 99% and the loan-to-value (LTV) increased to 43.6%. The company said, "2.6% increase in like-for-like valuations in 2023, with a 4.0% increase in Gyle since purchase, which was primarily as a result of the completion of six new lettings and renewals. 15.5% increase in portfolio valuation to £372.83 million (December 2022: £322.8 million) including the addition of Gyle."

Obviously, this is a rand-hedge share for South African investors because it is focused in the UK, but the returns are definitely under pressure and the LTV is still high at 43.6%. The share is relatively thinly traded with many days when there are no trades at all - which means it is not attracting institutional interest. On 23rd May 2024, the company announced that it had received a non-binding offer for all of its share capital from Vukile (VKE). This caused the share to rise sharply.