Year-end Trading Update & Notice of Results
Town Centre Securities PLC, the Leeds, Manchester, Scotland and London property investor and car park operator, today announces an update for its financial year ended 30 June 2018 and notice of its final results.
The Board is pleased to report that TCS ended its year positively, with significant progress made in updating, improving and recycling its property portfolio.
Having completed a key stage in the Company’s development programme earlier this year, focus has now moved onto the next phase. Since the half year results reported on 26 February 2018, TCS has completed purchases in Manchester and Chiswick, London, and the sale of a retail property in Edinburgh. In addition, the Company has renewed or extended all of its bank facilities.
Trading
Overall trading was in line with the Board’s expectations:- Like-for-like (LFL) passing rent up 4.1% (2017: 2.3%)
- Overall occupancy level 95% (June 2017: 99%)
- CitiPark continues to grow its revenues and profits
The LFL performance includes the increased rent from Leeds City Council in Merrion House, and the impact of the vacant unit in Milngavie, Scotland which we are currently sub-dividing (causing the occupancy reduction). Excluding these two items, underlying LFL passing rent was up 1.9%.
Good progress with our Leeds and Manchester developments
Leeds and Manchester combined make up 73% of the portfolio (based on the December 2017 valuation) and remain core to the strategy and growth prospects of the business. In the last 12 months significant progress has been made in further strengthening our regional presence:
Leeds:
The Merrion Centre is now a true mixed-use asset and with the re-development of Merrion House and the ibis Styles hotel, the dependence on traditional “mall” retail income has reduced to less than a quarter of the total.
The Company has completed the development and occupation of Merrion House with our joint venture (‘JV’) partner and tenant Leeds City Council (TCS share of annual rent now £1.7m). TCS is also in the process of entering into a JV with Leeds City Council for construction of an apart-hotel with retail units on George Street, alongside Leeds City Market and Victoria Gate.
Manchester:
Piccadilly Basin is the group’s largest development opportunity. Significant progress has been made with the construction of our Burlington House residential development which is proceeding to time and budget. This scheme, which is being developed in a JV with our partner Highgrove Group, will be held for private rental sector use, with completion targeted for May 2019.
The acquisition of Ducie House, a 33,000 sq ft multi-let office building adjacent to Piccadilly Basin, which was announced on the 8 May 2018, has now completed. It increases the size of our Piccadilly Basin site and in addition to gross annual income of £675,000, the plot includes a 63-space car park providing further development potential for the Basin.
Ongoing capital recycling to drive future returns
- Completed the acquisition of a property on Chiswick High Road in London for £1.6m plus costs at a yield approaching 5%, in line with our strategy to acquire individual properties in suburban London.
- Completed the sale of a retail unit on Princes Street for £3.3m, at a yield of 4.8% and significantly ahead of valuation, in line with our strategy of disposing of assets where we have maximised our return.
CitiPark
- Our car parking business continues to deliver strong revenue and profit growth.
- Improvements in performance at our newer branches are encouraging, and we are seeing the benefit of the capital investments in branches and technology advancements.
- Our investment in YourParkingSpace.co.uk continues to benefit both businesses and we continue to be a strategic partner in the start up’s growth and scaling up plans.
Bank refinancing completed
In the last six months TCS has extended or renewed all its bank debt facilities:- Lloyds: this £35m facility has been renewed for three years with an option to extend by two years with margins consistent with the previous facility.
- Handelsbanken: this £35m facility has been renewed for five-years with a small increase in margin reflecting the longer facility term.
- RBS: TCS has exercised an option to extend this £33m facility by a further year to 2021 at the same margin.
As a result, the Company now has certainty over its debt position for the next three to five years, along with improved and more flexible terms in all facilities. Alongside the 2031 £106m debenture, the company is securely financed, and remains committed to lowering debt levels over time.
Notice of results
The Company will issue its final results for the financial year ended 30 June 2018 on Wednesday 26 September 2018.
Edward Ziff, Chairman and Chief Executive, commented:
“We continue to make good progress against our strategic aims. The activity of the last 12-months reflects our strategy of continually improving the quality and sector mix of our portfolio for the long-term, whilst ensuring we have a balanced regional portfolio. Turning the Merrion Centre into a true mixed-use asset and continuing to lower our exposure to retail has helped ensure we have been protected from the worst of the turmoil on the high street.
“The opportunity for growth that sits within our development pipeline, combined with the recent updating and renewal of our banking facilities put us in a great position to focus on the next phase of our growth.”