(Alliance News) - Annual results from landlord Shaftesbury on Tuesday laid out the economic damage being done to London's West End entertainment district by Covid-19.
As the capital and parts of Essex and Hertfordshire prepared to go into Tier 3 restrictions from Wednesday, following "very sharp, exponential rises" in cases, Shaftesbury said the pandemic has had a significant impact on its performance in the financial year that ended September 30, though it was seeing the "first positive signs" for the new year.
London Mayor Sadiq Khan said the decision to move into Tier 3 was "incredibly disappointing" for businesses but urged the capital's residents to follow the rules.
As well as the restrictions on hospitality, the move up from Tier 2 means people should avoid travelling into or out of the area – potentially depriving Oxford Street and London's other shopping centres of much-needed custom in the run-up to Christmas.
London West End landlord Shaftesbury said it anticipates further measures to support its occupiers will be required as trading conditions will be "severely impacted during the important period" leading up to Christmas and over the New Year.
The property owner noted that the tighter restrictions will have an "adverse impact" on both its hospitality and retail occupiers' ability to trade, and will thus likely hit near-term rent collection.
Shaftesbury reported a net asset value per share of GBP7.43 as at September 30, down 24% on GBP9.82 a year ago. The firm said its portfolio valuation decreased on a like-for-like basis by 18% to GBP3.1 billion over the year.
Shaftesbury reported a pretax loss of GBP699.5 million, swinging from a profit of GBP26.0 million in the prior year.
"Rarely in history has the world seen such widespread disruption to normal patterns of life. Only now are we seeing the first positive signs that conditions will begin to improve in the year ahead," said Chief Executive Brian Bickell.
"The pandemic has had a significant impact on our performance, particularly during the second half of the financial year, depriving our hospitality and retail occupiers of footfall and trade and resulting in reduced rent collections, increased vacancy, reduced occupier demand and a fall in property valuations."
Shaftesbury shares were down 3.5% early Tuesday in the FTSE 250.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 6,524.23
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Hang Seng: down 0.7% at 26,209.26
Nikkei 225: closed down 0.2% at 26,687.84
DJIA: closed down 184.82 points, 0.6%, at 29,861.55
S&P 500: closed down 0.4% at 3,647.49
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GBP: soft at USD1.3333 (USD1.3340)
EUR: firm at USD1.2142 (USD1.2130)
Gold: up at USD1,842.82 per ounce (USD1,826.61)
Oil (Brent): up at USD50.08 a barrel (USD49.24)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US Federal Reserve begins two-day policy meeting.
1100 GMT Ireland goods exports and imports
0915 EST US industrial production
1630 EST US API weekly statistical bulletin
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The UK unemployment rate edged up in October, the Office for National Statistics said on Tuesday, and there are now more than 800,000 fewer employees in November compared to before the coronavirus crisis first hit. For the three months to October, the UK unemployment rate was 4.9%, up on the 4.8% recorded for the three months to September though beating expectations, according to FXStreet, of 5.1%. October's reading was 1.2 percentage points higher than a year earlier, the ONS said. Early estimates for November indicate that the number of payrolled employees fell by 2.7% year-on-year, which is a fall of 781,000 employees. Since February - just before the pandemic gripped the UK - 819,000 fewer people were in payrolled employment. Redundancies reached a record high of 370,000 in the three months to October. This marked an increase of a record 217,000 on the quarter, though the number of redundancies "fell slightly" in October.
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Joe Biden said Monday that US democracy proved "resilient" against Donald Trump's "abuse of power" after the Electoral College confirmed him as the next president, shutting the door further on unprecedented efforts to overturn the results. In his first extended attack on Trump since the election, Biden said in his hometown of Wilmington, Delaware, that the president and his allies "refused to respect the will of the people, refused to respect the rule of law, and refused to honour our constitution." Biden was referring to a Republican lawsuit, supported by Trump, that sought to overturn the results in several key states, before it was rejected unanimously by the Supreme Court last Friday. With the Electoral College having formalized his victory just hours earlier, Biden told the bitterly divided country: "It's time to turn the page." Trump continues to maintain that he was cheated of victory, even if his lawyers have not persuaded one court that they have a case. On Monday he announced that Attorney General Bill Barr, who contradicted his fraud claims, would leave his post next week.
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BROKER RATING CHANGES
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JPMORGAN CUTS BERKELEY GROUP TO 'NEUTRAL' (OVERWEIGHT) - TARGET 4,900 (5,200) PENCE
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JPMORGAN RAISES REDROW TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 600 (520) PENCE
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COMPANIES - FTSE 100
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JD Sports Fashion has bought San Jose, California-based Shoe Palace for USD325 million. Of this consideration, USD100 million has been deferred. "The acquisition of Shoe Palace complements the group's ongoing positive developments from the existing Finish Line and JD fascias in the United States, which includes the recent opening of JD's flagship store in Times Square, New York," said JD Sports. For 2019, Shoe Palace delivered a pretax profit of USD52 million on revenue of USD435 million. It has 167 stores and will continue to be run by its founders, though share ideas with JD's other US operation, JD Finish Line.
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COMPANIES - FTSE 250
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IG Group Holdings reported a sharp rise in revenue for its financial second quarter, which ended November 30, and guided to first-half growth. The online trading platform for contracts-for-difference said it performed at "comparable levels" in the second quarter following a "very strong" start of the year, generating revenue of around GBP207 million in the second quarter versus GBP120.8 million a year ago. This was driven by elevated trading volumes across a larger total active client base of 207,000 in the quarter, IG said. Net trading revenue for the first six months of the current financial year is expected to be around GBP416 million, up sharply on GBP249.9 million a year ago.
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Electrical power station operator Drax Group said it has agreed to sell the four combined cycle gas turbine power stations that make up Drax Generation Enterprise to VPI Holding for GBP193.3 million. This includes GBP29.0 million in contingent consideration related to the option to develop a new plant at Damhead Creek. Drax said the power stations have performed well since being acquired at the end of 2018, but they don't form part of its renewable generation strategy. The sale price represents a premium to book value, Drax said. "By focusing on our flexible and renewable generation activities in the UK we expect to deliver a further reduction in the group's CO2 emissions, which should accelerate our ambition to become not just carbon neutral but carbon negative by 2030," said Drax Chief Executive Officer Will Gardiner.
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COMPANIES - GLOBAL
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German carmaker Volkswagen closed one of its plants on Tuesday due to coronavirus infections among staff members. The measure took effect from the Monday-Tuesday night shift in the Volkswagen plant in the northern city of Braunschweig, also known as Brunswick in English. The company and the works council have agreed to allow those affected to join a short-time work programme. Volkswagen declined to comment on how many employees are affected. According to company sources, thousands of people are affected by the closure, the duration of which has not been disclosed.
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Tuesday's Shareholder Meetings
Blancco Technology Group PLC - AGM
Sareum Holdings PLC - AGM
Mirriad Advertising PLC - GM
Horizon Discovery Group PLC - GM re acquisition by PerkinElmer
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By Tom Waite; thomaslwaite@alliancenews.com
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