Shopping centre landlord Capital & Regional (CAL) expects a positive second half of the year despite the vote to leave the European Union and the collapse of BHS.

Shares moved 3.4% higher to 60.5p in early trading before falling back to 59.3p as management backed-up their bullish stance by recommending an 8% rise in the interim dividend to 1.62p.

This follows a strong first half for the owner of in-town shopping centres. In the six months to 30 June, Capital & Regional saw its net asset value (NAV) per share increase 5.9% year-on-year to 71p.

The level of new lettings also improved, up 4.6% during the period. Demand has not abated since the vote for Brexit with the company closing 29 lettings with another 19 in solicitors’ hands.

‘Management confirmed that, while tenants continue to negotiate hard, there has not been any Brexit price chipping,’ added analysts at broker Numis.

Web - Capital & Regional -18 August 2016

The collapse of department store chain BHS has left a £500,000 hole in Capital & Regional’s rent roll. Management is tackling the problem through plans to divide the space into smaller units and is in talks to let the BHS shop in Maidstone to a fashion retailer.

Capital & Regional’s optimism could be the result of the £65 million it is spending on diversifying its assets away from simply retail.

The cap-ex programme will see ski slopes, gyms and restaurants feature in some of its shopping centres. Management believe that leisure is less of a discretionary spend than high street retail.

The real estate investment trust has a £1 billion portfolio of seven shopping centres in places such as Blackburn, Luton, London, Redditch and Ipswich.

Issue Date: 18 Aug 2016