Our opinion on the current state of CAPREG(CRP)Capital and Regional (CRP) is a UK real estate investment trust (REIT) that owns and manages in-town community centres across England. The UK consumer and property market have faced significant challenges due to Brexit and COVID-19, both of which have negatively impacted foot traffic and caused some retailers to enter the British equivalent of business rescue.
A significant development for Capital and Regional was the injection of GBP 77.9 million by Growthpoint, which gave Growthpoint a 51.2% stake in the company. This investment caused the share price to rise, as it had previously been trading at a substantial discount to its net asset value (NAV).
In its results for the six months ending 30th June 2024, the company reported a 17.1% increase in net rental income and a 17.1% rise in adjusted profit. The company stated, "Over the six months to the end of June, not only did we complete more lettings and renewals than over the same period last year, we also achieved these at both a higher average rent per lease and average premium to the previous rent."
For South African investors, this share acts as a rand-hedge, given its focus on the UK market. However, the company is still under pressure, with a relatively high loan-to-value (LTV) ratio of 43%. Additionally, the share is thinly traded, with many days seeing no activity, which indicates it is not attracting significant institutional interest.
On 23rd May 2024, the company announced that it had received a non-binding offer for all its share capital from Vukile (VKE), leading to a sharp rise in the share price. On 19th September 2024, the company revealed it had received another offer from Newriver, offering 31.25 pence and 0.41946 Newriver shares for every Capital and Regional share. This renewed interest has again caused movement in the share price.
