Capital & Regional : 300kb

30 April 2024

Capital & Regional plc

("Capital & Regional" or "C&R" or "the Company" or "the Group")

Full Year Results to 30 December 2023

RESILIENT OPERATIONAL PERFORMANCE, ACTIVE ASSET MANAGEMENT AND ACQUISITION OF GYLE DRIVING IMPROVED PROFITABILITY AND DIVIDENDS

Capital & Regional (LSE: CAL), the UK focused REIT with a portfolio of community shopping centres, today announces its full year results to 30 December 2023. The Company will also publish a copy of its Annual Report and Financial Statements for the year ended 30 December 2023 in the Investor Info section of its website at capreg.com.

Highlights for the period

• 5% increase in like-for-like Net Rental Income1 ("NRI").
• 2.6% increase in like-for-like valuations over 2023.
• 86 new lettings and renewals, compared to 80 in 2022, at a combined average premium of 6.8% to previous rent2 and 16.6% to ERV2.
• In September, we acquired Gyle shopping centre, Edinburgh, for £40 million part funded through a £25 million equity raise, at a net initial yield of 13.5% expected to rebase to around 12%.
• 9.7% growth in Adjusted Earnings per share to 6.8p (December 2022: 6.2p).
• 7.3% increase in proposed final dividend of 2.95p per share delivering a total dividend for the year of 5.70p per share (December 2022: 2.75p per share and 5.25p per share, respectively).

Lawrence Hutchings, Chief Executive, comments:

"Our ongoing focus on delivering our proven community strategy and increasing our exposure to non- discretionary and needs based retail and services categories, continues to support our progress and has helped us deliver another positive set of results. Occupier demand coupled with our accretive capex programme has driven rental growth, underpinned a 9.7% increase in earnings and, with values also up slightly, given us the confidence to increase the dividend.

"The structural changes in retail continue to evolve, with online penetration now maturing and a continued return to the store by consumers meaning physical retail has cemented its position as a vital part of the distribution framework. This is especially evident in our core categories of value and non-discretionary merchandise. Retailers are continuing to focus on coupling the online platform with stores in a seamless guest experience.

"The rapid re-leasing of all three of our Wilko units to B&M in the first few months of 2024, further demonstrates the quality of our locations, the relevance of our strategy and our team's ability to capture demand from retailers for affordable space in urban locations. This backdrop, coupled with the improvement in our underlying operational business, and with the Company's balance sheet stable, gave us the confidence to proceed with the Gyle acquisition in September 2023. It marks our first step towards rebuilding the business through our continued capex programme and a disciplined approach to opportunities to buy well positioned retail led real estate at attractive entry points."

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Operational metrics remain robust demonstrating the continued appeal of C&R's community centres

• Footfall up 1.5% with 44.5 million shopper visits in 2023, representing 86.7% of the equivalent period for 2019.
• Occupancy steady at 93.4% (December 2022: 94.1%) with the marginal decline due to Wilko's administration.
• All three units vacated following Wilko's administration relet post year end, with B&M signing a portfolio deal in February 2024 and opening in May 2024, adding 140 basis points to occupancy. In the three months to the end of March 2024 we have completed 21 new lettings and renewals, at a combined annual rent of £1.4 million, representing an average premium to previous rent of 1.3% and to ERV of 5.9%1.
• Rent collection 99.2% for 2023 (December 2022: 97.6% at the time of Year End results).

Occupier led demand driving rental and earnings growth and underpinning dividend increase

• NRI of £23.9 million (December 2022: £23.5 million) reflecting net impacts of the Gyle acquisition and sale of Blackburn in August 2022. Statutory revenue broadly in line with the prior year at £59.0 million (December 2022: £56.8 million).
• Snozone's EBITDA1 increased by 64% to £2.3 million (December 2022: £1.4 million) reflecting the first full year unimpacted by Covid since 2019 and improved profitability from Snozone Madrid driven by the actions undertaken since the acquisition in 2021.
• 23% increase in Adjusted Profit1 to £12.7 million (December 2022: £10.3 million).
• IFRS Profit for the period of £3.7 million (December 2022: Profit of £12.1 million). The prior year included one-off gains of £12.5 million and £6.8 million from the discounted purchase of the Hemel Hempstead debt facility and deconsolidation of Luton, respectively.
• Net £16.0 million invested during the year expected to produce a yield on cost in line with the Company's target of 8% to 9%. At Ilford, the new TK Maxx anchor store successfully opened in November 2023 and a new NHS community healthcare centre has been handed over and is expected to open in Spring 2024.
• The first phase of the Walthamstow residential development undertaken by Long Harbour, creating 495 Build to Rent apartments in two residential towers and providing a new captive audience of shoppers for our Walthamstow centre, is progressing rapidly. The development is due to complete in early 2025.
• 2.6% increase in like-for-like valuations over 2023, with a 4.0% increase in Gyle since purchase, primarily as a result of the completion of six new lettings and renewals. 15.5% increase in portfolio valuation to £372.8 million (December 2022: £322.8 million) including the addition of Gyle.
• Net Asset Value ("NAV") increased 12.8% to £202.0 million (December 2022: £179.1 million).
• NAV per share and EPRA NTA per share at 90p and 88p respectively (December 2022: 106p and 103p, respectively) due to the increased number of shares in issue following the £25 million equity raise in September 2023.

Long term secure debt position

• Long debt maturity profile of 4.1 years with low average cost of debt of 4.25%. Approximately 80% hedged for the next three years.
• New five-year £16 million vendor loan arranged by Morgan Stanley drawn in September 2023 to part finance the Gyle acquisition.
• Group Net Loan to Value has increased to 43.6% from 40.6% at 30 December 2022 from investing cash into capital expenditure and part funding of the Gyle acquisition from central cash.
• Ilford loan extension agreed to September 2025 with further conditional options to extend term to end of 2027.

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Further progress in delivering energy efficiency driving forward our net zero carbon pathways

• EPC ratings of three centres improved from a 'D' to 'B' rating.
• 72% reduction in Scope 1 natural gas, and 15% in Scope 2 electricity consumption since 2019.
• 100% renewable and Renewable Energy Guarantees of Origin certified electricity at all shopping centres and Snozone venues.

Notes

• Adjusted Profit, Adjusted Earnings per share, Net Rental Income, Net Debt and the Snozone EBITDA metric are as defined in the Use of Alternative Performance Measures section. Adjusted Profit incorporates profits from operating activities and excludes revaluation of properties and financial instruments, gains or losses on disposal, and other non-operational items. A reconciliation to the equivalent EPRA and statutory measures is provided in Note 5 to the condensed financial statements.

• For lettings and renewals (excluding development deals and CVA variations) with a term of 1 year or longer which do not include turnover rent, like-for-like, excludes Gyle. Comparative numbers for 2022 are on a like-for-like basis.

• Includes dividends declared post period end but related to the period in question.

• Weighted average, debt maturity assumes exercise of extension options.

• 2022 comparative figure has been restated for a prior year adjustment to service charge income and expenditure recognised in the period. There is no change to Profit.

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Use of Alternative Performance Measures (APMs)

Throughout the results statement we use a range of financial and non-financial measures to assess our performance. A number of the financial measures, including Net Rental Income, Adjusted Profit, Adjusted Earnings per share, Net Debt and the industry best practice EPRA (European Public Real Estate Association) performance measures are not defined under IFRS, so they are termed APMs. APMs are not considered superior to the relevant IFRS measures, rather Management use them alongside IFRS measures to monitor the Group's financial performance because they help illustrate the trading performance and position of the Group. All APMs are defined in the Glossary and further detail on their use is provided within the Financial Review.

Capital & Regional is a UK focused retail property REIT specialising in shopping centres that dominate their catchment, serving the non-discretionary and value orientated needs of the local communities. It has a track record of delivering value enhancing retail and leisure asset management opportunities across a portfolio of tailored in-town community shopping centres.

Using its expert property and asset management platform Capital & Regional owns and manages shopping centres in Edinburgh, Hemel Hempstead, Ilford, Maidstone, Walthamstow and Wood Green.

Capital & Regional is listed on the main market of the London Stock Exchange (LSE) and has a secondary listing on the Johannesburg Stock Exchange (JSE).

For further information see www.capreg.com.

South African secondary listing

At 30 December 2023, 8,755,640 of the Company's total 224,906,731 shares were held on the South African register representing 3.89% of the total issued share capital. Java Capital acts as JSE Sponsor for the Group.

Forward looking statements

This document contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of government regulators and other risk factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this document. The Group does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document. Information contained in this document relating to the Group should not be relied upon as a guide to future performance.

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Chairman's statement

We are pleased to publish our full year results announcement. The delay in announcing was required to enable our new auditors, Mazars LLP, to complete a review of our service providers' internal processes, primarily in relation to the risk of an understatement of car park revenue. No changes to numbers have arisen from the work performed in this area and the Group's key operational and financial trading metrics remain in line with those disclosed in the Trading Update issued on 8 March 2024.

2023 was a year of continued progress for the Company, with retailer interest and guest numbers showing steady recovery from the challenges of the pandemic and endorsing our strategy of owning dominant community shopping centres. With consumer confidence inevitably affected by inflation and high borrowing costs, our focus on meeting demand for non-discretionary spending stood us in good stead and, coupled with the hard work and expertise of our asset management team, has allowed us to deliver the strong operational and financial results we are able report.

Following our success in strengthening the balance sheet in the previous year, we were delighted to take a significant step forward in September 2023 with the purchase of Gyle shopping centre in Edinburgh. This dominant mall, with its prosperous catchment area, is a perfect fit for the C&R portfolio and our management team has already identified a number of opportunities to improve the retailer mix, income and ultimately capital value: some of which we have already captured as detailed in today's results. We were also pleased with the reaction to the transaction from shareholders, analysts and market commentators, with widespread agreement of our view that this represented a very exciting opportunity that was a natural fit for the Company.

The Gyle purchase was facilitated by a combination of stapled debt from the vendor banks and a £25 million equity raise which was supported by existing shareholders and fully underwritten by our majority shareholder, Growthpoint. As in previous years, the Board is indebted to Growthpoint for its exceptional support, and confidence in the management team who identified and painstakingly negotiated the deal.

A central part of the Company's strategy is to invest selective capital expenditure on our assets. In 2023, the team invested a net total of £16.0 million, focused in particular on Ilford delivering new units for TK Maxx and the NHS, as well as Wood Green.

Capex programmes will continue into 2024 and beyond, with the management team very mindful of the requirement to deliver a high return on cost to justify the use of our available resources. We strongly believe that our proactive management of assets will continue to deliver income growth and, as investment markets recover, capital value growth.

Retailer failures were much reduced in 2023, and although the administration of Wilko in the second half of the year created a challenge in three of our centres, our team responded swiftly and had agreed terms with B&M for all three units by the year end, formally signing them up to the space in February 2024.

One ongoing legacy from the pandemic is the reduced use of car parks. This is principally resulting from a modal shift in central London but also due to some shorter-term impacts from our development in Walthamstow as well as a reduction in contract local office worker car parking in Hemel. The team is working on a range of alternative uses to support car park income including the introduction of EV charging and potential storage, as well as last mile logistics.

From an operational and financial point of view, 2023 was a strong year and continued the Company's steady trend of recovery from the pandemic. Valuations were up 2.6% on a like-for-like basis and Net Rental Income increased by 5%, also on a like-for-like basis, leading to a 23% increase in Adjusted Profits and a 9.7% increase in Adjusted Earnings. Rent collections remain very high. We also saw a strong performance from Snozone increasing their EBITDA by 64% including a significantly improved profit contribution from Madrid.

While the Company's net debt to property value rose slightly to 43.6%, this increase was driven solely through the use of central cash for capex and an element of the Gyle acquisition. The Board seeks to strike a balance between the need to invest into assets and a desire to keep the Company's loan-to-value ratio as low as possible.

We have extended the term on our Ilford debt and agreed further options to extend maturity out to the end of 2027. None of the Company's facilities are due to expire in 2024. We have an excellent relationship with all of our lenders and our weighted average cost of debt remains competitive at 4.25%. In addition, we hold total cash reserves of £36.3 million, providing full funding for ongoing capex projects.

The Board recognises the fundamental importance of income for shareholders and, based on these financial results, were pleased to announce a 7.3% increase to the proposed final dividend to 2.95 pence per share, which if approved will result in a total dividend for the year of 5.70 pence per share, an increase of 8.6% from 2022. These though remain uncertain times and, as with recent dividends, the Board is conscious of the importance of preserving cash both for capital expenditure investment and to maintain financial flexibility conscious of the risk of macro or geo-political developments impacting operations or capital values. As such, the Board has decided to again offer a scrip option with this final dividend. Growthpoint has taken up this option.

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C&R has long been a pioneer of strong environmental sustainability and we have seen continued progress across the portfolio, significantly reducing utility consumption across both the shopping centre and Snozone businesses. We also place a particularly high importance on the wellbeing of our staff and I am pleased to report high and positive responses to staff surveys undertaken in the year.

As ever, I am most grateful to my Board colleagues for their unstinting support. Ian Krieger, our Audit Committee Chair and Senior Independent Director will retire by rotation at the 2024 AGM, having served nine years on the Board and I would like to record my particular thanks to Ian for his consistently constructive input. Laura Whyte has agreed to take on the role of Senior Independent Director, and Gerry Murphy has recently joined the Board and will succeed Ian as Audit Committee Chair.

While the Company has undoubtedly moved forward in 2023, there have been continued economic and market headwinds and I must acknowledge the exceptional role which Lawrence and his team have played, not only in confronting these challenges, but in ensuring that C&R's profile and market reputation remains so strongly positive.

David Hunter

Chairman

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Chief Executive's Statement

We continued to focus on delivering our proven community strategy during 2023, increasing our exposure to retailers in our core non-discretionary and needs based retail and services categories including fresh and catered food, grocery, pharmacy, personal services (including skin and nail care) and medical services with our growing partnership with the NHS. This continues to be one of the most resilient parts of the UK's retail landscape and, as consumers focus on life's essentials it has become even more relevant to our communities, guests and retailers at this time.

The structural changes in physical retail have continued to evolve with physical stores emerging as a vital part of the distribution of goods and services as retailers focus on coupling the online platform with stores in a seamless customer experience. The higher costs associated with online retailing makes the store a key area of focus for the majority of commodity and value orientated retail as typically lower margins, high volumes and low unit values combine to make profitability of the online channel a challenging proposition.

This has driven an increase in retailer demand for our centres and floorspace, especially in our urban locations, which our lettings team has been quick to capture, enabling us to deliver robust leasing, occupancy and valuation metrics despite the volatile macro-economic backdrop we have seen throughout the year.

Adjusted Profit per share grew by 9.7% as we continue our post Covid recovery, thanks in no small part to the effort and dedication of our talented team - thank you.

Our ESG initiatives are on track, with the Company delivering significant reductions in utility consumption throughout 2023. I am especially proud of the work we undertake to support the diverse and vibrant communities we serve, be it through our work with local charities or the support we provide to new local retailers as they establish themselves in our centres. This also helps us tailor the customer proposition to reflect the local community.

In September 2023, we completed our first new property acquisition since I started at C&R almost seven years ago, with the purchase of Gyle shopping centre in Edinburgh. This is an important step for C&R after four years of torrid structural and Covid related restrictions and pressures which have seen the Company needing to consolidate to survive the impacts on income and value which have ravaged our sector.

Our confidence to make this first step towards rebuilding the Company by seeking the opportunities to buy well positioned, retail led real estate in key markets stems from the performance we are seeing in the underlying operational business as footfall, rent collection and leasing demand have all significantly recovered, as well as our ability to leverage the expertise and economies of scale available from our platform.

Gyle has all the attributes of a well-established, high performing community shopping centre. It is anchored by two supermarkets (Morrisons and Marks & Spencer) and offers a strong mix of convenience and community retail including pharmacies, NHS facilities, optometrists and food retail. The centre has superb accessibility by car and tram and dominates an affluent and growing trade area in Edinburgh.

We will maintain our disciplined approach to capital management and focus on our ongoing reinvestment in our centres with our capex repositioning masterplans, where these are accretive to earnings and provide the appropriate risk adjusted return.

The continuing macro-economic pressures including inflation, the interest rate response and the state of the debt and real estate capital markets is encouraging us to take a cautious approach to H1 2024, despite the resilient operational and occupational markets.

Over 80% of our debt book benefits from low cost, 2027-maturity, asset backed non-recourse debt with a long- term supportive lender, helping underpin our Adjusted Profit and dividend.

Consumer confidence and retailer performance

We have continued to see the impact of rising inflation and debt costs on business and consumer confidence. This is being mitigated by high employment, salary growth and higher levels of household savings. We are conscious of the impact these pressures have on the communities we serve and our efforts to support those most in need continues through our various community support initiatives.

We have seen the early signs of respite in inflation and the cost of debt, along with some erosion in consumer savings. In previous economic cycles, these times of reduced consumer confidence have typically favoured sales of grocery and non-discretionary retail and services. Based on feedback from our retailers and our own footfall data we are seeing an increase in retail sales across much of our anchor store and speciality tenant base. Many have been able to pass on the full impact of inflation into prices and this will, over time, assist us in unlocking rental growth for our locations.

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The improvement in non-discretionary retailer performance is driving occupier demand and we continue to work towards increasing our exposure to these categories especially in the grocery, pharmacy and medical sectors in line with both the ongoing structural change in retail and societal shifts around consumption.

Our London assets are also experiencing modal shift from personal motor vehicle to public transport and cycling in line with the trend of '15-minute neighbourhoods'. All three of our London centres have excellent access to train, tube and bus networks and are experiencing increasing population density within walking distance with further development to come as markets allow.

Our relationship with the NHS Trusts in greater London continues to expand. We opened the second phase of the diagnostics centre we have delivered in Wood Green with the Whittington NHS Trust and construction has advanced at Ilford on the community health centre we are creating with the North East London NHS Trust, which will open in phases from late spring of 2024.

Structural changes in retailing

Another feature of last year was the continued evolution in distribution of goods and services in the UK. The UK has one of the most mature online retail markets, with a share of just under 30% according to ONS data. Online sales as a percentage of total retail sales have been on a downward trend for the last two years, which is a sharp reversal from the Covid era which naturally accelerated channel shift in retail spending.

The store remains an important part of the majority of retailers' distribution strategies as customers support store-based retailing and retailers benefit from lower costs per transaction. The new model prioritises the seamless integration of both channels.

Whilst the overall market share is high, non-discretionary and grocery sectors have online penetration of around 10%, despite the length of time this has been part of the retail landscape. Pharmacy and value retailers are often lower still, as these categories have lower margins and consumers have indicated a preference to use the proliferation of convenience store formats at transport interchanges and in town and city centres locally, especially in highly urbanised areas. These retailers are amongst the most expansionary and we continue to work closely with an increasingly wide cross section of non-discretionary and value based retailers wishing to locate or expand in our centres.

Inflation has had a significant impact on the cost of doing business as a retailer. Increases in staff costs and petrol, and therefore distribution, together with a higher percentage of product returns, has disproportionately impacted online retailers with several high profile business failures during the year. The lower unit cost store based retailing model still accounts for the majority of retail sales and informs or prompts purchasing decisions. In addition, consumers are increasingly drawn to the convenience of store based collection and returns which, in turn, are a lower cost last mile logistics solution for a retailer. This also provides retailers with the added benefit of a guest potentially buying something, or seeing something they then buy online later, whilst they are in store.

Several of the larger pure play online retailers are now seeking to create bricks & mortar store networks to better compete with those traditionally physical retailers who are successfully embracing both retailing channels. This benefits us as retailers take new, or reconfigure and right size existing, stores to ensure they are able to meet the demands of consumers in a competitive retailing landscape.

After 10 years of structural change, these are exciting times for physical retail with significant opportunities for retail platforms such as ours that understand and can capitalise on the operational intensity needed to evolve existing centres to reflect this new seamless commerce retailing dynamic.

Leasing and occupancy

We have also seen a recovery in our occupancy post the Covid lows, which is encouraging on many levels. The leasing model continues to evolve in the UK and we are at the forefront of these changes as we seek to adopt technology to improve our data, insight and processes to improve the speed and quality of our decisions in this critical area. We are also continuing our concerted effort to maintain and develop relationships with key retailers in each of our core or merchandising pillar categories.

Our investment to diversify and tailor our customer proposition to the local communities by introducing new smaller and independent retailers into our centres is proving beneficial to our leasing progress. In many cases we support these retailers through the initial business planning process, then through store design and pre and post opening with a combination of skilled internal team members with retailing or design backgrounds and/or specialist external consultants. All of this is designed to help our retailers make a success of their first venture in our centres and, where applicable, grow them across our portfolio.

Establishing the right mix of national branded retailers and anchor stores with local independent traders, who have a deep understanding of the unique demand characteristics amongst our specific local communities, remains a key area of focus for our commercial team.

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Sustainability

We are very proud of our achievements in this important area. Many of the initiatives are simply good business, lowering costs through more efficient use of resources including energy and water. Importantly they are also enabling us to lower our carbon footprint supporting the journey towards our net carbon zero targets.

Energy consumption, in our shopping centres, reduced by 3% on the previous year and 15% against the 2019 base year, whilst Snozone reduced its electricity consumption by 11% and 16%, respectively. Our focus on moving away from gas led to a 72% reduction in gas consumed in our shopping centres and a 25% drop at Snozone against the 2019 base year. Water consumption reduced by 18% against the 2019 base year at Snozone and 13% against the prior year whilst the shopping centres witnessed an increase against 2022 due to construction activity and a 3% reduction against the 2019 base year .

Following the dramatic weather events in 2022, we have undertaken a considerable amount of work on our readiness to deal with a wide range of extreme weather events from floods to extremes in temperature and the pressures that places on our operations.

We are active in providing pathways for small and start up retailers to locate in our centres. We support retail entrepreneurs through the business planning, store design, pre and post opening period and it is great to see some of these businesses go on to grow into multiple location retailers following their first successful store within our centres.

It has also been pleasing to see our staff pulse survey record 95% engagement with over 450 comments. A net promoter score of +15 places us in the top quartile of companies using the Happiness Index. We launched our new 'purpose': "we exist to protect and progress the essentials of community life" and principles (Bring the World in, Uplift the Every Day, Make it Count and Win as One) across the business and continue in our mission to ensure we have a high performance dynamic diverse and inclusive culture.

Our centre based teams supported 140 charities and 153 community groups last year, with over 600 hours of community service and 112 community events hosted in our shopping centres. In aggregate we provided or raised £370,000 in community financial support, working with our local council partners to ensure our resources are focused where it matters most.

Looking forward - our focus for the next 12 months

Our core strategy continues to be the delivery of our community strategy providing defensive, resilient income growth to support our growing and covered dividend to shareholders. To achieve this our focus for the next 12 months will continue to be:

• Providing the most relevant and compelling customer proposition of retail and services for the vibrant and diverse communities we serve.
• Executing on our Environmental, Social and Governance initiatives, appreciating we have responsibilities to both our communities and future generations.
• Working with our retailers to ensure our centres and the space we curate remains relevant for the next generation of retail, where online and physical meet as a platform for seamless commerce.
• Investing to further reposition our centres into the community centre format and grow income.
• Being relentless in our commitment to adapt to our dynamic and rapidly evolving retail landscape.
• Actively managing our centres to drive optimum income and value across the full spectrum of uses including retail, residential and mixed use, leisure and food catering.
• Adopt a renewed focus on cost management across all aspects of our business.

Given the uncertain outlook in the first part of this year we will adopt a cautious approach to capital deployment therefore maintaining balance sheet flexibility until the inflation, interest rate and capital markets trajectories are more visible.

Finally, I would like to thank our staff, shareholders, retailers, local authorities and other stakeholders for all their support in 2023 and continued confidence in our business.

Lawrence Hutchings

Chief Executive

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Operating review

New lettings, renewals and rent reviews1

Our asset management team maintained strong leasing momentum in 2023, completing 86 new lettings and renewals, at a combined annual rent of £3.9 million, representing an average premium to previous rent of 1.5% and to ERV of 23.3%1 (2022: 80 new lettings and renewals for a combined annual rent of £4.4m). This was a higher volume of deals than 2022 but with a lower average value as 2022 included two particularly large transactions at Ilford, namely the NHS community health centre and TK Maxx relocation.

At Wood Green, we completed five catering unit lettings at the new 'Bridge' food and entertainment development, as well as introducing Bodycare to the scheme. We also secured occupiers for c. 7,000 sq ft of vacant office space.

At Walthamstow, we completed new lettings to Starbucks and Black Sheep while at Ilford we agreed a new lease to Addax. Renewals agreed during the year included Savers and Sports Direct at Hemel Hempstead, Bank of Scotland, Lloyds Bank and Waterstones at Walthamstow, Sports Direct and Superdrug at Wood Green as well as Claire's Accessories and H&M at Ilford.

• Includes transactions for Hemel Hempstead, Ilford, Maidstone, Walthamstow and Wood Green for both years.

• For lettings and renewals (excluding development deals and CVA variations) with a term of 1 year or longer which do not include turnover rent.

In addition to the figures detailed in the table above, we have completed six new lettings and renewals at Gyle in Edinburgh since we acquired the asset in September 2023. These include introducing Costa and Waterstones to the scheme, as well as securing renewals with Superdrug and Vodafone.

Since the year end, we have secured a portfolio deal with B&M to take all three of the Company's units vacated as a result of the Wilko administration. In a short space of time, this adds a new anchor into our schemes at Hemel Hempstead, Maidstone and Wood Green, mitigates the occupational impact from the loss of a top 10 retailer, largely replicates the rent and further demonstrates the desirability of space at the Company's community centres. The units are scheduled to open for trading in May 2024.

In total in the three months to the end of March 2024 we have completed 21 new lettings and renewals, at a combined annual rent of £1.4 million, representing an average premium to previous rent of 1.3% and to ERV of 5.9%1.

Rental income and occupancy

Occupancy at the year-end was impacted by the administration of Wilko which was the driver of this falling by 70 basis points during the period or by 90 basis points on a like for like basis. However, the letting of the three Wilko units to B&M that completed post year end is worth approximately 140 basis points to occupancy. The Group has been impacted post year end by the administration of the Body Shop, where the Group has three units which have all ceased trading, representing approximately 40 basis points to occupancy.

Contracted and passing rent have increased by approximately 17.5% and 16.7%, respectively as a result of the Gyle acquisition. On a like for like basis, the metrics have fallen by 2.9% and 3.6%, respectively. This is primarily driven by the loss of £0.7 million of Wilko income. The Group has received notice from the Department of Work and Pensions that they will vacate their two Job Centre units during 2024 as part of a wider consolidation of their estate, having expanded significantly in the wake of the Covid pandemic. We are

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