Is Now the Time to Buy Capital Shopping Centres Group plc (CSCG)?

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I believe there is one issue that is holding Capital Shopping Centres back, and that is debt.

You see, like most retail investment trusts, Capital Shopping Centres relies on debt to fund its expansion. However, Capital Shopping Centres’ debt has grown rapidly and now accounts for 120% of the company’s market capitalization. The worrying thing is, I can see interest payments on this debt currently amount to 60% of the company’s gross profit.

Even so, Capital Shopping Centres continues to look for further opportunities to expand. Indeed, the company is currently involved in the construction and regeneration of four major shopping centres, which in my opinion puts further strain on the group’s balance sheet.

So all in all, taking into account Capital Shopping Centres’ poor balance sheet and relatively average yield compared to the rest of the sector, I believe now does not look to be a good time to buy Capital Shopping Centres at 362 pence.

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The article Is Now the Time to Buy Capital Shopping Centres? originally appeared on Fool.com and is written by Rupert Hargreaves.

Rupert does not own any share mentioned in this article.

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