Capital & Regional reports 'deeply disappointing' annual results

The co-investing fund manager said its NAV had dropped from 1004p to 267p last year and its properties under management slumped from £6.1bn to £4bn. The property values of the company's Mall shopping centre, Junction retail warehouse and X-Leisure funds fell collectively by £1.5bn, largely as a result of a rise in yields.

The fall in values led to a huge pretax loss of £513m. Excluding property writedowns, the recurring pretax profits fell from £32.7m to £27.6m. The final dividend has been scrapped.

Chief executive Hugh Scott-Barrett described the loss as 'deeply disappointing'. However, he said the company was compliant with all its banking covenants. It reduced its debt during the year from £625m to £113m, raised new equity for the Mall, renegotiated financial covenants to provide greater headroom and cut costs.

It has just agreed a £65m equity raising for the Junction and is in talks to raise new equity for X-Leisure. It is also in negotiations with its principal lending bank on further amendments to its core debt facility.

Scott-Barrett warned that 'although I believe we are well on the way to a successful outcome, uncertainty remains until completion'. As a result, the company warned that there was 'material uncertainty' about the continuing availability of bank debt which 'may cast significant doubt on the group's ability to continue as a going concern'.

He added: 'I am realistic about the need for the group to consider a wide range of financial and strategic options both to strengthen the group's financial position and to begin the task of rebuilding shareholder value.

'We will therefore continue to focus on de-leveraging the group balance sheet, to identify opportunities to recycle capital and to make selective investment where returns are compelling.'