9 Feb 2018 07:00
Shaftesbury PLC
Trading and finance update
Shaftesbury PLC, the Real Estate Investment Trust that owns a 14.9 acre portfolio in London's West End, today announces a trading and finance update for the period 1 October 2017 to 8 February 2018. The announcement is being issued prior to the Company's Annual General Meeting being held later today.
Highlights
· Continuing high footfall and robust trading through the period · High occupancy levels and leasing activity remains strong · Good progress in letting our recent larger schemes: 52% of completed space now let or under offer
· Strategic acquisitions of 72 Broadwick Street, Carnaby and six shops in Neal Street, Seven Dials · Equity base strengthened through a share placing in December 2017, raising £260.4 million
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Brian Bickell, Chief Executive, commented:
"The economic strength and resilience of London's West End lies in its enduring local, national and global appeal as a destination of choice for people and businesses.
Throughout the period, and particularly from November in the lead up to Christmas and New Year, we have seen continuing high footfall and robust trading across our areas. Occupancy levels in our portfolio remain high, available space continues to attract considerable interest, and we are making good progress in letting our recent larger schemes."
9 February 2018
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 Andrew Leach/Reg Hoare
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Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98
About Shaftesbury
Shaftesbury PLC is a Real Estate Investment Trust, which invests exclusively in the liveliest parts of London's West End. Our objective is to deliver long-term growth in rental income, capital values and shareholder returns.
Focussed on 1.1m sq. ft. of restaurants, leisure and retail, our exceptional portfolio extends to 14.9 acres, clustered mainly in Carnaby, Seven Dials and Chinatown, with substantial ownerships in east and west Covent Garden, Soho and Fitzrovia.
In addition, we have a 50% interest in the Longmartin joint venture with The Mercers' Company, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.
Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. It is implemented by an experienced management team with an innovative approach to long-term, sustainable income and value creation, and a focus on shareholder returns. We have a strong balance sheet with conservative leverage.
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.
Overview
The economic strength and resilience of London's West End lies in its enduring local, national and global appeal as a destination of choice for people and businesses.
The West End's unrivalled combination of cultural and historic attractions, and world-class shopping, dining and leisure choices attracts huge and growing numbers of domestic and international visitors. In addition, it is an important and attractive location for office-based businesses, particularly those in the creative, media and tech sectors, bringing a large working population to the area.
The unique combination of the breadth of the West End's visitor economy, and those who work in and close by, delivers exceptional footfall, estimated at over 200 million visits annually. It creates a prosperous, seven-days-a-week trading environment, which is not reliant on the fortunes of the UK economy or domestic consumer spending patterns. For Shaftesbury, these features underpin sustained occupier demand across our 1.1 million sq. ft. of shops, restaurants, cafes, pubs and bars in our carefully-curated locations in the heart of the West End.
Throughout the period, and particularly from November in the lead up to Christmas and New Year, we have seen continuing high footfall and robust trading across our areas. Occupancy levels in our portfolio remain high, available space continues to attract considerable interest, and we are making good progress in letting our recent larger schemes.
Leasing activity remains strong. During the first quarter, we completed lettings, renewals and rent reviews totalling £7.7 million, achieving rental levels ahead of ERVs at 30 September 2017. At 31 December 2017, space with a rental value of £2.9 million was under offer.
EPRA vacancy at 31 December 2017
ERV £m | % of total ERV | ||
31.12.17 | 30.9.17 | ||
Larger schemes1 | |||
Ready to let | 2.9 | 2.1% | 3.3% |
Under offer | 2.0 | 1.4% | 0.2% |
4.9 | 3.5% | 3.5% | |
Other vacancy | |||
Ready to let | 2.9 | 2.1% | 1.7% |
Under offer | 0.9 | 0.7% | 0.8% |
3.8 | 2.8% | 2.5% | |
Total |
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Ready to let | 5.8 | 4.2% | 5.0% |
Under offer | 2.9 | 2.1% | 1.0% |
| 8.7 | 6.3% | 6.0% |
1. Thomas Neal's Warehouse, Seven Dials and Central Cross, Chinatown
Total EPRA vacancy increased over the quarter by 0.3% to 6.3%, following the completion in December of a number of refurbishment schemes. Excluding larger schemes, EPRA vacancy at 31 December 2017 was 2.8%, in line with our ten-year average. Of this, 0.7% was under offer.
Space held for or undergoing refurbishment
ERV £m | % of total ERV | ||
31.12.17 | 30.9.17 | ||
Larger scheme1 | 1.3 | 1.0% | 1.7% |
Other schemes | 3.5 | 2.5% | 4.9% |
Total | 4.8 | 3.5% | 6.6% |
1. 57 Broadwick Street - 31.12.2017: offices and residential; 30.9.2017: retail, restaurant, offices and residential
Progress on larger schemes
· Thomas Neal's Warehouse, Seven Dials
This 22,700 sq. ft. retail-led scheme went under offer in November 2017 to a single occupier, and we are close to concluding the letting. It will bring to Seven Dials an exciting new format, being launched by a globally-experienced retailer.
The distinctive retail and restaurant mix in Seven Dials also will benefit from the recent completion of the repaving of Earlham Street and improvements to the Cambridge Circus junction nearby, both of which are expected to increase footfall throughout the area, particularly once the Elizabeth Line opens at the end of 2018.
· Central Cross, Chinatown
Of the scheme's 13,800 sq. ft. of restaurant space, two of the three large units and three of the smaller units (9,900 sq. ft.) are now let or under offer and we are in advanced negotiations over the remaining two units (3,900 sq. ft.).
We are progressing the marketing of the five retail units (34,500 sq. ft.) fronting Charing Cross Road and continue our patient approach to selecting tenants that meet our long-term objectives for this busy location. Currently we have discussions underway on several units.
Westminster City Council's extensive public realm scheme encompassing Newport Place and Newport Court, which we are funding, is now underway and is expected to complete in phases from spring 2018.
· 57 Broadwick Street, Carnaby
Construction of the retail and restaurant space (11,400 sq. ft.) completed in September 2017. These units have been handed over to tenants for fit-out.
Completion of the 15,500 sq. ft. of grade A office accommodation and two new apartments (2,000 sq. ft.) is expected by the end of March 2018.
Other schemes
At 31 December 2017, 29 other schemes were underway, extending to 35,000 sq. ft. of commercial and 20,000 sq. ft. of residential space, which together represented 2.5% of ERV.
We continue to investigate and progress schemes to improve the rental prospects and value of buildings across our portfolio. This often involves negotiating the early surrender of existing leases to enable us to implement our ideas.
Strategic acquisitions
Since 1 October 2017, we have secured two strategic additions to our portfolio.
In early December 2017, we acquired the freehold of 72 Broadwick Street, situated at the eastern gateway to Carnaby, for £92.2 million (including costs).
The acquisition gives the Group control over this important 0.5-acre site. Subject to planning consent, it will provide opportunities, through change of use, reconfiguration and refurbishment, to create valuable new retail and restaurant space in the building, once the office tenant leaves in September 2018. In addition, we will reconfigure and refurbish the remaining office space, and up-grade the residential accommodation. We estimate the cost of these works will be in the region of £20 million.
In late December 2017, we acquired six buildings on Neal Street, Seven Dials, for £24.4 million (including costs). Adjacent to existing holdings, these buildings increase our ownership of frontages on the northern section of Neal Street to around 70%.
Situated close to the Tottenham Court Road Crossrail hub, the northern end of Neal Street is forecast to see material footfall growth once the Elizabeth Line service starts in December 2018. Current rental tones on this part of the street are significantly lower than at the southern end. However, with the benefit of growing footfall, together with the careful curation and coherent tenant selection strategy that we will implement, we expect this differential in rents will narrow significantly over the medium term.
Although the availability of assets to buy which meet our strict criteria continues to be limited, we continue to identify and investigate a number of potential acquisitions. The timing of purchases is always impossible to predict.
Disposals
We have recently sold two non-core properties comprising two shops, 1,875 sq. ft. of office space and three apartments. The disposals generated net proceeds after sale costs of £12.9 million and a surplus over book value at 30 September 2017 of £4.2 million.
Finance
On 6 December 2017, we strengthened our equity base, issuing 27,855,508 million new ordinary shares, representing approximately 9.98% of our issued share capital at the time. The shares were issued at £9.52 per share, equivalent to EPRA NAV at 30 September 2017. Net proceeds after issue costs of £260.4 million were part used to fund the acquisition of 72 Broadwick Street, with the balance available for:
· the acquisition of a long-leasehold interest in 90-104 Berwick Street for £41 million, which we expect to complete in late 2018, following completion of the vendor's redevelopment scheme
· anticipated capital expenditure at 72 Broadwick Street
· further acquisitions and value-enhancing schemes.
The equity issue has ensured we have sufficient available resources to continue to invest in our portfolio. Once deployed, we will be in a position to raise additional new debt facilities to support our long-term investment strategy, whilst maintaining a balance between equity and debt which the Board considers appropriate for this business.
At 31 December 2017, net debt, including the Group's 50% share of the Longmartin joint venture, was £809.0 million (30.9.2017: £973.6 million), representing an LTV of 21.5% (based on net debt and portfolio value at 30 September 2017, adjusted for net investment since 1 October 2017). Our blended cost of debt remains at 3.3% and the weighted average debt maturity is 10 years.
Ends