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The Investment Column: Retail revival boosts CSC

A bullish results statement from Capital Shopping Centres, the leading retail property landlord, underlines two trends in UK retailing. The first is that consumer spending is rising strongly, with sales in some of CSC's centres 14 per cent ahead of the same period last year. The second is that, try as the Government might to clamp down on large out-of-town shopping developments, the public still likes shopping in them.

While the Government's figures put retail sales growth at 6 per cent, CSC is seeing growth of 13 per cent. The largest malls such as the Metro Centre in Gateshead and Lakeside, in Thurrock, Essex are performing strongly and grabbing market share.

Capital Shopping Centres' figures were so buoyant that the company took the unusual step of reporting a half-year valuation. This shows that at the end of June the portfolio was worth pounds 75m more than at the year end in December, an increase of 6 per cent. This equates to an increase in net asset value of 19p to 274p per share. Pre-tax profits in the six months to June were up by 25 per cent to pounds 27.8m.

With around 20 per cent of its rents linked to retailers' turnover, CSC is benefiting more than most of its rivals from the upturn in consumer spending. The engine of rental growth is last year's rent rise at the Lakeside centre which saw some rents rise by 40 per cent. Those increases will keep coming through this year along with others at the Metro Centre.

The only cloud on the horizon is the opening of the giant Bluewater Park centre near Dartford, Kent, which may take trade away from Lakeside. CSC says the market is big enough for both.

After two years of stagnation CSC shares have soared in the last 12 months, closing up 4p yesterday at 294p. That represents only a relatively small premium to the latest asset value and probably a discount to the year end figure. Hold on.