Business Week - Capital to Xcape slowdown

Capital & Regional is confident its re-positioned business will avoid the slippery slope of slowing demand in retail property as it announces its interim results next Tuesday.

The company, which formerly dealt with a wider range of properties, is now specialising in retail and leisure property.

Financial director Lynda Coral says this was an exciting time of growth for the company. ‘Retail property certainly keeps me on my toes,’ she says.

The chartered accountant was poached in 1990 from BDO Stoy Hayward, where she worked advising Capital. ‘The company was a lot smaller,’ she says. ‘They were one of my favourite clients.’

Although she shares the finance function with corporate finance director Roger Boyland, she has overall responsibility for accounting and corporate support, including financial reporting.

She says that her current job is very different from working at BDO.

‘It was going from an advisory role to being in a very active public company.’

At the beginning, she admits, the company suffered from concern about retail and threat of the internet, but it was unfounded. ‘People still want to go to shopping centres.’

The company owns eight retail parks and eight retail centres throughout the UK. Of all of these, Coral finds Xcape in Milton Keynes the most exciting.

This leisure centre is the biggest development Capital built and includes an indoor ski-slope with real snow, the first in Europe. There are also shops, a 16-screen cinema and indoor rock climbing.

Coral says: ‘My children love it, they go skiing and shopping and they tell their friends that their mum works at the company that owns it. But it always ends up being expensive because the retail’s great.’

Xcape, which is 50% owned by Pricoa, Prudential’s American branch, cost #65m to develop, but just over a year after its opening, the complex is completely rented and running at a profit. Since it opened, the centre has seen between three and four million visitors.

Coral says the company is trying to roll out this winning formula as a brand. ‘We want to build two more in the UK, at Castleford and Braehead in Glasgow and expand the project overseas in Germany’s Ruhr Valley.’

With its hands-on management approach, Capital is bringing over American techniques to this country, according to Coral. She says that, unlike most of its competitors, Capital manages its properties in-house.

‘We collect rent and organise marketing information. We work closely with the retailers, in partnership with the tenants.’

She says this intense approach proved profitable as it gets more people into the centres and tenants can afford to pay more rent.

Capital & Regional’s website: www.capreg.com.