Capital & Regional chief executive Martin Barber was defiant this week about the prospects for the property market, despite the company posting a mixed set of half-year results.

The co-investing retail and leisure property fund manager is one of the worst performing property stocks this year, with its share price having dropped 48%. ‘I think what you’re seeing is sentiment rather than reality,’ Barber said. ‘Everyone has been saying that retail is going over a cliff, now they’re saying offices are going the same way. What we’re seeing is strong tenant demand, good occupancy levels and an increase in consumer visits to our schemes.’

The company posted a 3.6% increase in net asset value to 1318p a share and a 17% rise in recurring pretax profits to £17.6m. The NAV uplift was hit by a much smaller revaluation surplus of £11m, compared with £96m in the first half of last year, as slowing capital growth and a valuation deficit in the Junction retail park fund fed through to results.

The Junction posted a property return of -0.5%, or -3.7% on a geared basis, compared with the Investment Property Databank Benchmark of +2.9% over the six month period. The underperformance was due to the fund’s exposure to large DIY units where estimated rental values have been reassessed following third party rent review appeals for other owners.

The Mall shopping centre and X-Leisure funds continued to outperform. The Mall produced a return of 2.9% in the first half against IPD’s 2.6% and X-Leisure produced 6.3%. Barber said equivalent yields at the Mall’s centres remained ‘broadly stable’ at the end of June at 5.21%. ‘However, these have started to soften in response to general market conditions,’ he added. ‘This trend is widely predicted to continue at least for the remained of the year.’

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