Mall Owner Capital Hit by Falling Shop Rental Prices
Kumar, Nikhil, The Independent (London, England)
Evidence of declining rents for retail space triggered weakness around Britain's biggest mall owner, Capital Shopping Centres, which was held back as the market ended the week on a negative note last night.
The stock was marked down by 1.8p to 388.1p as analysts weighed in on industry data showing that retail rents continued to fall in September. Figures from Investment Property Databank led Panmure Gordon to repeat its "sell" view on Capital, whose shares have enjoyed a strong run since the middle of August.
The broker said the rally meant Capital's shares were now valued at levels close to the likes of Great Portland Estates, up 0.8p at 350p, and Derwent London, down 28p at 1,550p - both of which trade in the recovering London office market. On Panmure's numbers, Capital is also trading at a premium to British Land, which closed 1p lower at 504.5p, and Land Securities, which ended down 4p at 679.5p last night. "We remain cautious about the outlook for consumer spending in 2011 in the light of austerity tax measures and public sector unemployment," said Panmure in a note to clients.
"With occupier demand remaining low and no new flagship retail schemes currently in progress, we believe the balance of rental negotiating power is likely to be shifting more in favour of the retail tenants. We believe retail landlords will be under continued pressure to offer highly discounted leases on new lets and renewals to maintain occupancy levels."
Overall, the markets were lower, with the FTSE 100 falling 23.84 points to 5,703.37 and the FTSE 250 shedding 49.15 points to close at 10,833.51. The insurer Old Mutual led the blue-chip losers, slumping by up to 7.4 per cent before recovering. It ended down 6.9p, or 4.75 per cent, at 138.3p after HSBC ended talks to buy a majority $8bn stake in South Africa's Nedbank. Old Mutual owns just over half of Nedbank. HSBC's shares fell 9p to 653.3p.
In the wider banking sector, Barclays gained ground, rising by 5.05p to 285p, following recent reports that it was looking at ways to bolster its capital base without issuing equity. Royal Bank of Scotland was also higher, firming up by 1.1p to 46.4p, but Lloyds fell back by 0.3p to 70.18p. Standard Chartered added 11.5p to close at 1,899.5p after analysts at Fitch upped its rating for the group. In other news, the bank also denied rumours that, following HSBC's departure, it was looking to move into Nedbank.
Elsewhere, the engineering giant Rolls-Royce rose by 7p to 635p after Goldman Sachs recommended the stock in a defence and aerospace sector round-up. The broker said that although the civil aerospace market was recovering and aircraft deliveries were proving better than it had hoped, cuts in the Government's defence budget looked set to be at the lower end of expectations. Goldman went on to revise its view on Rolls-Royce from "neutral" to "conviction buy". However, it remained bearish on BAE Systems, which closed 0.7p lower at 365.8p after Goldman reiterated its "sell" view.
"While the actions BAE has taken this year are encouraging, we continue to believe the company faces the most challenging outlook in the sector, given that it derives about 98 per cent of sales from defence, with around 70 per cent from the US and 20 per cent from the UK," Goldman explained.
On the upside, BT led the blue-chip risers after reassuring investors about the fate of its public-sector business. …