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12 Nov 2008 07:00
FOR IMMEDIATE RELEASE
12 November 2008
LONDON & ASSOCIATED PROPERTIES PLC INTERIM MANAGEMENT STATEMENT - THIRD QUARTER 2008
The third quarter of 2008 has seen a significant deterioration in property values driven by a near complete absence of bank finance. LAP cannot expect to be unaffected when our portfolio of shopping centres and retail property is revalued at the year end.
However, shareholders will recall that, in the two to three years prior to the current market turmoil, we sold a significant number of secondary properties. As a result we now have a high quality portfolio, over 90% of which is focused on top quality recently refurbished shopping centres, shops in exclusive parts of Central London and prime shops throughout the UK.
Our portfolio should also benefit, on a relative basis, through the rental growth achieved at our major properties, our historically conservative valuations, as well as the active asset management we have undertaken to improve the tenant profile and rental income at a number of our centres.
Following our disposal programme, we have maintained substantial cash balances which provide us with considerable financial flexibility. We have a weighted average loan term of more than 5 years (not including overdrafts) and the earliest repayment date for any loan is August 2011.
We collected over 99% of rents within two weeks of the September quarter day and have only three tenants in administration trading from three units and paying a total rent of ‚£0.1m. No single tenant accounts for more than 5% of our rental income, our top 56 tenants, all but one of whom are significant chains of shops, comprise 75% of our rental income and some 70% of our tenants have more than five years unexpired on their leases. As a result we feel cautiously well positioned to avoid the worst of the tenant defaults generally predicted for the coming months.
Our two main Shopping Centres at Sheffield and Windsor are both effectively fully let. At Orchard Square, Sheffield, we have now completed the new 46,000 sq ft anchor store for TK Maxx and it opened for trade on 30th October. Early reports suggest that it is trading particularly well. At the same time, the extended units that we were building there for Starbucks, Evans and Blue Banana are now completed and the tenants all expect to open their doors for trading by the end of November. These new units alone have added ‚£0.9 million to our annual rent roll, an incremental ‚£0.6 million compared to the units that have been replaced. Total construction costs and fees on both these projects was ‚£ 6.2m.
We have no significant developments from a cost point of view on the horizon. The largest project is at The Mall in Islington, London, where we are at the final stages of preparing for a listed building appeal. The hearing is scheduled for early December and we remain confident of a satisfactory outcome. Any additional future developments will only be considered with a pre-let to an undoubted covenant in place, as is the case with The Mall.
We are following closely the potential change of ownership of Halifax Bank of Scotland (HBOS), our joint venture partner in Analytical Ventures Ltd, although it has not to date affected us. We have not to date been affected by the potential change of ownership of HBOS.
I believe that we are well positioned to ride out the forthcoming difficult period: we have completed our development and disposal programmes, leaving us to focus on intensively managing our quality and well-spread portfolio of shopping centres and retail property and in a position to take advantage of any opportunities that the current market presents.
Ends.
Contact:
John Heller, Chief Executive, LAP. Tel: 020 7415 5000
Robert Corry, Finance Director, LAP. Tel: 020 7415 5000
Baron Phillips, Baron Phillips Associates. Tel: 020 7920 3161
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