By Gareth Vorster

Owner of some of the largest shopping centres in the UK including the Trafford Centre and Lakeside, Capital Shopping Centres Group said on Monday that 56 new long term leases in the third quarter had lifted annual rent by three million pounds.

Listed on the London and Johannesburg stock exchanges, the group highlighted continued strong occupancy levels at 97% in an interim management statement for the period from July 1 to October 31.

Group chief executive, David Fischel said: "As evidenced by a 97% occupancy level, Capital Shopping Centres (CSC) has delivered a robust operational performance in the period in the face of a challenging economic and retail background. CSC remains well positioned through its focus on leading and high quality regional shopping centres in the UK."

According to CSC, the UK retail environment, which had become more difficult in the second quarter of 2011 reflecting the low growth in the wider economy, showed no improvement in the third quarter. Consumer confidence indices had fallen to low levels as discretionary spending power had come under considerable pressure with inflation outpacing salary increases.

With a portfolio of 14 centres representing 16 million square feet of retail space and a valuation of GBP6.9 billion, CSC's assets attracted well over 300 million customers annually.

It said that July to October footfall was in line with 2010, up 2% for the year to date.

"Generally we continue to see strong demand and rental growth for large stores and catering units while smaller stores, which comprise the majority of the short term leases referred to below, remain a difficult market," it said.

"Strong brands and international retailers continue to favour CSC's high footfall destinations for their flagship outlets, with key openings in the period including Banana Republic at Trafford Centre and both Apple and Hollister at Braehead, a combination now in six of CSC's centres," the group said.

The group pointed out that its asset management teams worked proactively to manage the tenant mix and provide space for successful and expanding retailers while downsizing those who were struggling.

Of CSC's 2,300 units, seven were affected by tenant failures in the quarter. The total for the year to date was a relatively low at 68 units, 2% of rent, CSC said.

"We are also actively engaging with retailers to ensure that CSC's centres participate in the shift towards e-commerce for example through collection centres, social networks and other marketing initiatives," it said.

Looking ahead, the group said: "We continue to expect a low-growth environment, a challenging retail market and a restricted financing market for real estate for some time in the UK, with the eurozone crisis creating more uncertainty and impacting investment decisions. We are reassured however by the sound positioning, robust operational performance and defensive financial structure of CSC's business."

Source: I-Net Bridge