Interim Management Statement

CAPITAL SHOPPING CENTRES GROUP PLC

INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JANUARY TO 17 MAY 2011

Capital Shopping Centres Group PLC today announces its interim management statement for the period from 1 January to 17 May 2011:

David Fischel, Chief Executive of Capital Shopping Centres Group PLC, commented:

"Since acquisition, The Trafford Centre has performed strongly and we are pleased to have now integrated this prime asset into CSC's business. Footfall at CSC's centres has remained strong with a 3% increase for the year to date which follows similar increases in each of the last two years as customers continue to choose to visit larger shopping centres with a wide range of attractions. We continue to expect 2011 to be a difficult year for consumers but CSC's overall performance for the year to date has been in line with expectations, with progress on lettings to improve the overall tenant mix and in its active management and investment plans."

Highlights of the period

·; Integration of Trafford Centre acquisition following completion on 28 January 2011

·; Operational indicators - occupancy 97%, footfall up a further 3%

·; 36 new long term leases adding £2 million to previous annual rent and prominent openings improving tenant mix

·; Active management projects underway across CSC's centres

·; Progress with major projects including positive public consultation at Victoria Centre, Nottingham

Integration of The Trafford Centre

The Trafford Centre has performed strongly since the completion of this important acquisition at the end of January 2011. Occupancy is 97 per cent (30 April 2011), with encouraging levels of interest for the 8 vacant units. Footfall for the year to date is up 7% on the same period of 2010. Recent openings have included the new lingerie chain Boux Avenue, Lacoste, JD Wetherspoon and Ted Baker. The Trafford Centre's powerful leisure and catering offer has continued to prove attractive, with the Lego Land Discovery Centre in Barton Square opening a second ride in April in response to the popularity of the original destination. Reconfiguration projects to extend the stores of M&S and Debenhams are now well under way, with the M&S store recently handed over for fit out and anticipated to open in the autumn. Planning consent has been secured for the enclosure of two service yard areas and proposals to enclose the central courtyard area of Barton Square have been submitted for planning consent.

Operational integration has taken place with CSC reorganising into two regions, CSC London and CSC Trafford, led by Kay Chaldecott and Mike Butterworth respectively. The Trafford team has taken responsibility for Braehead, Glasgow, Manchester Arndale and Cribbs Causeway, Bristol. The new structure has strengthened the group's overall executive team and sharing of ideas across the two regions will be to the benefit of the group as a whole. An early example of cost savings is the achievement of significant insurance premium reductions for The Trafford Centre by integrating its policies into CSC's group programme. CSC's central construction and development team is now closely involved in Trafford Centre active management projects.

Operational indicators

Occupancy across CSC's centres, including for the first time St. David's, Cardiff, remains high at 96.8 per cent (31 December 2010 97.7 per cent). The reduction reflects seasonal fluctuations. Some 1 per cent of CSC's rent roll, 41 units, has entered administration since the year end, a level CSC would regard as normal for the post-Christmas period. 13 of these units are still trading or have been relet and a further 13 are under offer.

Footfall at CSC's centres is up 3% year on year, a third consecutive year of increases of this amount. Customers are continuing to choose to visit the larger centres offering a wide range of leisure and catering attractions combined with a strong mix of on-trend retailers.

Letting progress

Following the acquisition of The Trafford Centre, CSC has over 2,400 retail, catering and leisure units and pro forma passing rent of around £370 million. 36 new long term lettings have been transacted so far in 2011 for £6 million new annual rent, an increase of £2 million on previous rent for those units. These lettings, which comprise a very small proportion of CSC's overall rent roll, were at an aggregate secured rent 11 per cent below ERV with upside from turnover overage provisions. They include leases secured at both above and below ERV, those below including short term lettings converting to long term leases and a few persistent vacancies.

173 short term leases were in place at 31 March 2011 representing 2 per cent of passing rent and 5 per cent of ERV (31 December 2010 - 202 leases representing 2% of passing rent and 7% of ERV, excluding The Trafford Centre). The reduction is due to post-Christmas expiries and conversion to long term lettings.

The extension to St David's, Cardiff, is now 86 per cent committed by income and 81 per cent by area (31 December 2010 - 83 per cent and 81 per cent) with a further 7 per cent by income at the heads of terms stage or in detailed negotiation. Five new lettings have been exchanged since Christmas including the first Welsh stores for Mango and Krispy Kreme.

CSC's centres continue to prove attractive locations for retailers with, for example, Boux Avenue opening three of its six debut stores at CSC's centres - The Trafford Centre, Manchester, Lakeside, Thurrock and St. David's, Cardiff. Other lettings and openings in the period include Hobbs at Cribbs Causeway, Bristol, Superdry at The Glades, Bromley and Ask Restaurant at The Chimes, Uxbridge.

Active management projects

As part of the previously reported £128 million planned investment in active management projects across CSC's 14 shopping centres, much progress has been made in the quarter including:

·; planning permission has been secured for a 20,000 sq. ft roof box extension at Lakeside, Thurrock, to create a 35,000 sq. ft. flagship store for a major US fashion brand

·; H&M has been relocated at Braehead, Glasgow, into the former Primark store. The new flagship H&M store opened earlier this month and enabling works have commenced in their vacated unit to create a new flagship store for Hollister expected to open summer 2011

·; in Newcastle, Next completed the move from Northumberland Street into Eldon Square with their impressive new 65,000 sq. ft flagship store opening last week creating a major frontage onto Blackett Street and Newgate Street

·; amalgamation works have started at Braehead, Glasgow, to create a 6,000 sq. ft. store for a major US brand, expected to open autumn 2011

·; the conversion of the former Fun Ice at Braehead, Glasgow, into four new catering units is well advanced with opening expected next month

·; planning consent has been secured for two additional units on the retail park at Braehead, Glasgow

·; plans are being drawn up for the creation of five new catering units in Queen's Gardens at The Glades, Bromley with a view to submitting a planning application in the third quarter

Progress with major projects

We continue to make good progress with major plans for Victoria Centre, Nottingham, Lakeside, Thurrock and Braehead, Glasgow as follows:

·; In Nottingham, a favourable view was expressed on the planned extension of the Victoria Centre by the overwhelming majority of respondents to March's public consultation and exhibition and we intend to submit the planning application this quarter

·; At Lakeside, work continues on preparing detailed proposals for an extension with a view to submitting a planning application later in 2011

·; At Braehead, we continue to work with the local authority in the development of a master plan for the wider area which should lead to increased economic activity and job creation

Once implemented, these plans could create in aggregate 1.4 million sq. ft. of new retail space for an investment of around £500 million with an expected stabilised initial yield on cost of 7 - 8.5%.

CSC recognised as UK's top shopping centre investment manager - Trevor Wood Associates

CSC was recognised as the leading investment manager for shopping centres in the UK by the Trevor Wood Associates' Definitive Guide to Shopping Centres 2011 published last month. Reinforcing the strength of the CSC portfolio, the survey placed three of CSC's centres in the top six, five centres in the top ten and ten centres in the top 30. The success of the recent redevelopment of St David's, Cardiff, has propelled the centre into the top ten.

Property valuations

CSC has not conducted a valuation of its shopping centres since 31 December 2010 - the next independent valuation will be undertaken on 30 June 2011 and published with the first half results on 2 August 2011.

The retail property investment market has been characterised in the quarter by a limited supply of prime assets and, with valuation yields at a historically high spread over gilts, good demand for such assets. This has supported slightly tightening yields for the best assets. While banks in particular have been careful in releasing secondary assets to the market, the expectation of increased supply and the reduced availability of debt for such assets have led to increased polarisation of the market. IPD UK monthly index (retail) showed 0.8 per cent capital growth in the first three months of 2011.

Financing

At 31 March 2011 net external debt was £3.2 billion and the debt to assets ratio was 47%, in line with the pro forma published following the acquisition of The Trafford Centre and within CSC's stated target range of 40 to 50 per cent. The planned debt repayments and interest rate swap terminations at a total cost of around £40 million arising from and discussed at the time of the acquisition are now largely complete.

Conference call

A conference call for analysts and investors will be held today at 9.00 BST.

A copy of this announcement is available for download from our website at www.capital-shopping-centres.co.uk

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