Braehead set for £150m extension

The sportswear retailer is asking creditors, including landlords, to back a company voluntary agreement (CVA) that would see it close up to 95 stores, retaining a core group of 150, and pay rent monthly rather than quarterly.

But with the lack of new developments driving up the price of prime retail space, the owner of Braehead said it would vote against the CVA, dealing another blow to JJB, which rents four stores from Capital and needs 75 per cent of creditors to agree. JJB is taking its restructuring plan to its lender, Bank of Scotland, today.

Presenting its annual results yesterday, Capital, which last month added Manchester's Trafford Centre to its portfolio, joined rivals in warning that 2011 would be a challenging year for retailers. But chairman Patrick Burgess said the outlook for prime retail spots was positive, despite the threat posed by government spending cuts.

He said: "What is clear is that this environment is not affecting all retail property equally. The strongest destinations are growing stronger as UK retail trade continues to concentrate.

"With supply of new centres severely limited, successful UK and international retailers looking to their growth plans for the next couple of years are increasingly likely to compete for high-profile, good-quality space in those best centres."

Capital said it had already seen signs that this was pushing up rents at the end of 2010. The firm reported like-for-like net rental income up 2 per cent in 2010, as occupancy rates at its established malls reached 98.6 per cent. It saw underlying profit rise 29 per cent to 97m in the year to 31 December.

The group said it would spend about 600m on extending existing centres as it seeks to grow, while avoiding the risk of opening a new destination.

It owns land next to Braehead and revealed plans in October for a 140m-150m upgrade. Capital yesterday said it will seek planning permission next year for a 525,000sq ft extension.

Capital's results come after rival Hammerson, which owns malls including Silverburn in Glasgow and Aberdeen's Union Square, also reported rising rents and occupancy levels this week.

Retail expert Matthew McEachran at Singer Capital Markets warned competition for prime space might mean rental woes for many chains.He said: "The trend for retailers over the last two years has been much more benign than it had been pre-credit crunch, so if (landlords] do demand and succeed in driving the (rent] reviews up, this would clearly be a negative for the sector and the main tenants, including Marks & Spencer, John Lewis and House of Fraser."