TJ Hughes collapse hits Mall

The value of the Mall Fund shopping centre portfolio that includes Blackburn's Mall dipped 1.3% in the third quarter of the year, investor Capital & Regional told the stock exchange on Wednesday.

The Mall Fund was valued at £977.9m on 30 September, reflecting a net initial yield of 6.92%. C&R owns 16.7% of the fund.

Hugh Scott-Barrett, chief executive, said: "Our funds have continued to demonstrate their resilience during the quarter given the challenging market conditions facing our retailers. The Mall valuation reflects the impact of the administration of TJ Hughes at Maidstone at the start of the quarter. The remaining property values have been stable across the rest of the portfolio. Since then we have not had any other significant administrations. Metrics for footfall, occupancy and cash collection underpin an encouraging operating performance in the current environment."

The fund's managers have been keen to reduce its borrowing in the past couple of years and the pattern of selling assets to raise cash continued in Q3 with the disposal of Malls in Middlesbrough and Barnsley. Both the Alhambra Centre Barnsley and the Cleveland Centre Middlesbrough were sold in September to F&C REIT for £108.1m, reflecting a net initial yield of 8.6%. The sales left the Mall Fund with a net debt to value ratio of 56%. The fund now contains nine shopping centres.

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