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19 May 2009 07:00
FOR IMMEDIATE RELEASE
19 May 2009 LONDON & ASSOCIATED PROPERTIES PLC: INTERIM MANAGEMENT STATEMENT
London & Associated Properties PLC ("LAP" or "the Company"), the fully listed UK shopping centre and Central London retail property specialist, today reports that during the period from 1 January 2009 to 19 May 2009 LAP has enjoyed a relatively strong trading period despite the uncertainty in the UK economy and the retail property market.
This strong performance has been underpinned, to a large extent, by securing two significant listed building consents to develop properties at The Kings Road, Chelsea and Upper Street, Islington.
At the Kings Road, we have signed our largest ever single letting to Anthropologie, the US retailer of high-end fashion and homeware, which has taken a 15-year lease at an annual rent of £1.1m.
Comprising 14,000 sq ft of retail space and 2,500 sq ft of office accommodation, as well as a separately let apartment producing £50,000 a year, the building is the site of the former Antiquarius antiques market. The lease is being guaranteed by Anthropologie's parent company, Urban Outfitters Inc., which is quoted on Nasdaq and has a market capitalisation of over $3 billion. In addition to the listed building consent, freeholder consent has also been granted and redevelopment of the property is now underway.
At The Mall in Islington, fashion retailer Jack Wills has signed an agreement to take a 10 year lease of the whole building including the first floor, at a rent of £367,500 a year. This follows an agreement for lease signed in 2007 for the ground floor and basement only. LAP is seeking an amendment to the listed building consent received in February 2009, to permit the removal of the first floor to create a double volume space within The Mall.
The total development cost of these two projects is expected to be less than £ 2m, and will be financed from existing cash resources
LAP has also re-let the large former Zavvi unit at Orchard Square, Sheffield, to Republic on a 10 year lease at an annual rent of £400,000 with a top-up to 9% of turnover from the unit. This compares to Zavvi's previously passing rent, following last year's review, of £368,000. An incentive package equivalent to 18 months rent has been given to Republic.
Within LAP's portfolio, empty units only account for £300,000 a year of the company's total rent roll, of which £200,000 a year is from units that were vacated by tenants following some form of insolvency One of these units has become vacant since the Company's results were announced at the end of last month. There are no units occupied by insolvent tenants where the rent is being paid, or owed, by an insolvency practitioner.
Cash collection remains strong and 99% of rents due on the March quarter day have been collected.
There remains uncertainty over the performance of properties during the current period which may last until next year. However, LAP believes that the low rate of tenant default and the significant lettings achieved in London and Sheffield demonstrates there is still a reasonable occupational market for quality shops in the right locations. Additionally, the Company has no term loans expiring until 2011 at the earliest, and no development programmes at an advanced stage without strong tenants in place.
Cash flow has always been treated as a high priority and the recent decision to issue bonus shares in lieu of part of the final dividend for 2008 is a further example of this policy. The shares will be issued on 3rd July 2009 to shareholders on the register at the close of business on 5th June 2009.
Michael Heller, Chairman of LAP, commented: "I feel that while 2009 may not witness any meaningful recovery in property values or performance, we will be able to ride out this period by concentrating on cash collection and the close management of our existing portfolio."
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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