25 Sep 2017 07:00
Shaftesbury PLC
Finance and trading update
For the period 1 April 2017 to 22 September 2017
Finance
We have concluded important initiatives during the period to strengthen further the Group's financing arrangements, taking advantage of the current interest rate environment and lenders' appetite to provide secure long-term finance.
As previously reported, earlier this month we issued £290 million first mortgage bonds due 30 September 2027 with a coupon of 2.348%. The proceeds were used to repay bank facilities totalling £75 million and reduce drawings against our revolving credit facilities, with the balance being retained as cash. This significantly increased our financial resources whilst further diversifying our sources of finance; bonds now represent 45% of our debt funding with the remainder provided by term loans (34%) and bank facilities (21%).
Following the recent increase in forward interest rates, we have taken the opportunity to cancel our remaining £125 million of legacy interest rate swaps at a cost of £57.9 million, equivalent to a reduction in EPRA NAV of 21 pence per share.
Following this refinancing activity, we now have circa. £305 million of resources available to invest further in our portfolio. Our blended cost of debt has reduced, on a pro-forma basis, by 40 basis points to 3.3%. The marginal cost of future borrowing is 1.1% so, on a fully drawn basis, our weighted average cost of debt would fall to 2.8%.
Trading
London's West End's prosperity is underpinned by a unique combination of its appeal to Londoners and domestic and international visitors, as well as its diverse business community, which brings a large local working population.
The West End has been busy throughout the summer, with a notable increase in overseas visitors, who are benefiting from the weakness in Sterling. Although national consumer spending trends are unclear, trading in our locations continues to be buoyant.
Leasing activity
Demand for the smaller accommodation we traditionally offer is good. Lettings, lease renewals and rent reviews are being concluded on terms in line with our expectations, and vacancy levels remain low.
As we have previously noted, larger space requires occupiers to commit to significant investment in fit-out and substantial rental commitments and we have always expected letting periods to be longer for than for smaller space. Current political and macro-economic uncertainties are now showing signs of slowing occupiers' decision-making processes. Whilst we continue to see a broad range of interest in our larger space, the time taken to conclude larger lettings is increasing but we will be patient in selecting occupiers that meet our long-term objectives.
Major schemes
· Thomas Neal's Warehouse, Seven Dials
Marketing of this flagship space continues, and we are confident we will secure a trading concept consistent with our aspirations and compatible with particular local planning and licensing constraints.
· Central Cross, Chinatown
Our scheme completed at the end of May 2017, and is now being marketed. We are well advanced in agreeing terms on two of the three restaurants, and three of the four smaller cafés are either let or under offer. The retail units fronting Charing Cross Road have attracted considerable interest, which we are currently evaluating.
Westminster City Council's scheme to create a new public square in Newport Place and improvements to Newport Court, which we are funding, will commence in October 2017.
· 57 Broadwick Street, Carnaby
The contractor will shortly be handing over the retail and restaurant units, both of which are already under offer. Marketing of the office accommodation has recently commenced and we expect handover early in 2018.
Acquisitions
In the period since 1 April 2017, we acquired two restaurants, at a total cost of £9.0 million, bringing total purchases for the financial year to £37.1 million. The availability of properties to buy in our locations, and which meet our strict criteria, continues to be limited.
As reported in August 2017, we have entered in to a contract to forward purchase a long leasehold interest in 90-104 Berwick Street, Soho at a price of £38.5 million.
Located at the southern end of Berwick Street, the property is being redeveloped to provide 12,500 sq. ft. of retail, a 5,500 sq. ft. supermarket, a 2,000 sq. ft. restaurant and a 110-bedroom hotel. Both the hotel and supermarket have been pre-let. The redevelopment is expected to complete in late 2018, which will, subject to satisfying various contractual conditions, trigger the completion of the acquisition.
Disposals
Disposals of non-core assets since 1 April 2017 comprised a small mixed use building in Covent Garden and five apartments. These sales totalled £7.6 million, 8.9% above book value at 31 March 2017.
25 September 2017
For further information:
Shaftesbury PLC 020 7333 8118 Brian Bickell, Chief Executive Chris Ward, Finance Director | RMS Partners 020 3735 6551 Simon Courtenay MHP Communications 020 3128 8100 Reg Hoare/Gina Bell |
This announcement includes inside information
About Shaftesbury
Shaftesbury PLC is a Real Estate Investment Trust, which owns an exceptional 14½ acre portfolio in the heart of London's West End - a highly popular, sought-after and prosperous destination for visitors and businesses. Our holdings are concentrated in Carnaby, Covent Garden, Chinatown, Soho and Charlotte Street.
Our objective is to deliver long-term outperformance in growth in rental income, capital values and shareholder returns.
We focus on retail, restaurants and leisure in the liveliest parts of the West End. At 31 March 2017 our portfolio comprised 282 restaurants, cafés and pubs and 301 shops, together extending to 1.1 million sq. ft., and accounting for 70% of our current income. In our locations, these uses have a long record of occupier demand exceeding their availability. The portfolio also includes 405,000 sq. ft. of offices and 570 apartments for rent, which provide 17% and 13%, respectively, of our current income.
In addition, we have a 50% interest in the Longmartin joint venture with The Mercers' Company, which has a long leasehold interest in St Martin's Courtyard in Covent Garden. Extending to 1.9 acres, it includes 21 shops, ten restaurants and cafés, 102,000 sq. ft. of offices and 75 apartments.
Forward-looking statements
This document may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.
Any forward-looking statements made by, or on behalf of, Shaftesbury PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Shaftesbury PLC does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Information contained in this document relating to Shaftesbury PLC or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.
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