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Capital & Regional plc

Capital & Regional plc is a co-investing real estate asset manager, managing property assets for funds in which it holds a significant stake. Capital & Regional has established highly specialised, results driven teams, focused on providing a 'leading edge' approach to the management of property assets. This enables the Company to create enhanced returns for shareholders, tenants and investors in the funds.

Market capitalisation

c. £800m

Property portfolio

Property under management is currently valued at £6 billion:

The Mall Fund
Established in March 2002 by Capital & Regional and Morley Fund Management, The Mall has grown to become the largest shopping centre indirect investment vehicle, owning and operating some 9% of the UK market.

Gross assets are now approximately £3 billion in 23 Malls with common investment criteria:
Town centre locations.
Dominant in localised town catchment or strong metropolitan catchment.
Minimum 150,000 sq ft lettable area.
Car park or public transport facilities.
Covered, or able to be.
Tenant profile "mass market" or "value" retail.
Revenue and capital growth potential.
Value-adding management opportunities.

The Junction retail park portfolio
The Junction’s retail park portfolio would be difficult to replicate in the current market. Currently valued at approximately £1.5 billion.
It has been assembled using the following investment criteria:
At least 80,000 sq ft multi-let retail park, freehold or long leasehold.
Open A1 bulky goods or mix thereof.
Value enhancement opportunities.
Either the dominant scheme in local catchments, or ability to become so.

In 2005 The Junction was the top performer out of 27 specialist vehicle funds included in the HSBC/APUT Pooled Property Fund Index.

X-Leisure
As Capital and Regional’s leisure arm, the X-Leisure team has applied its business model throughout its business units, capitalising on a strong industry knowledge and expertise. The X-Leisure Fund, currently valued at approximately £750 million, has continued to enjoy the benefits of an increasingly strong leisure market. It has seen a 7% rise in footfall across its destinations. This coupled with a 4% increase in leisure spend in the UK, has created good trading conditions for operators which, in due course, should feed through to stronger rental growth. The X-Leisure portfolio includes Xscape, Snozone Holdings, Great Northern Warehouse and Hemel Hampstead.

Trade parks
Since December 2005, Capital and Regional has assembled a portfolio of 23 trade parks with a value in excess of £100 million, purchased at a net initial yield of 5.5% and with an average rent of just over £5 per sq ft. This is a niche market. Trade parks provide goods and services primarily to the building sector and are a one-stop shop for Tradesmen. There are already around 1000 trade parks in the UK serving a market with a total spend of circa £50 billion per annum.

German portfolio
Capital and Regional now owns or has contracted a portfolio of 23 big box retail properties in Germany valued at approximately €480 million, of which 13 were bought in 2005. Our expansion strategy has been management led. We started working with Hahn Group in 2004 and built up a strong understanding with them before we invested.

Plans to launch a REIT?

The REIT legislation as currently drafted does not suit Capital and Regional, and we have no plans to convert in the first wave.

We are watching developments closely and expect that there will be discussions with the Government to improve the flexibility of the regime. This may open up further possibilities in the future. We support attempts to build up new sources of equity for property, and to deliver strong returns to investors.

We are planning to remain as a co-investing asset manager, and believe that there are signs that the benefits of this business model are being better understood in the investment community.

Reason for joining The REITs and Quoted Property Group

We believe that the The REITs and Quoted Property Group will be an influential forum for informing future policy debates. We also believe that there may be future opportunities for us to work with companies within the REIT regime.

Find out more

www.capreg.com

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