SHB.L Regulatory News (SHB)

SHAFTESBURY PLC

Trading Update

Buoyant trading over the festive period, sustained occupier demand across all uses

Yield-led decline in valuations, rental values robust

Shaftesbury PLC, the Real Estate Investment Trust that owns a 16.4-acre portfolio in the heart of London's West End, today announces a trading update for the period from 1 October 2022 to 31 December 2022.

Brian Bickell, Chief Executive, commented:

"London's West End has seen buoyant footfall and trading throughout the important festive period, with occupier trading, on average, ahead of levels seen prior to the pandemic. This strong performance is in stark contrast to the more subdued spending and consumer confidence reported nationally.

The appeal of our carefully-curated, ever-evolving and distinctive destinations in the heart of London's West End to visitors and occupiers underpins our confidence in the resilience and long-term prospects of our exceptional portfolio."

Overview

§ Buoyant trading conditions over the festive period:

- Occupier turnover up 42% vs December 2021 and 6% vs December 2019.

§ Sustained occupier demand across all uses:

- Leasing transactions with rental value of £8.0m concluded in the quarter, demonstrating growth against ERVs and previous rents.

- ERV of space held for, or under, refurbishment at 31 December 2022: 6.9% of portfolio ERV, down from 8.3% over the quarter, following scheme completions.

- EPRA vacancy at 31 December 2022 increased 0.4% to 4.4%, including space delivered from refurbishment schemes;

§ Wholly-owned portfolio valuation at 31 December 2022: £3.1bn

- Like-for-like decrease over the quarter: 2.7%, largely reflecting 15 basis points yield expansion on commercial space.

- Equivalent yield: 4.22%, +12 basis points over the quarter; commercial space now valued at 4.6%.

§ Net debt at 31 December 2022: £826.6m (+£22.0m vs 30 September 2022):

- LTV 26.5%, +1.3% vs 30 September 2022.

- Available liquidity: £133.2m.

§ Interim dividend: 2.7p per share, to be paid on 15 February 2023 (referred to as the "Shaftesbury Q1 2023 Dividend" in a separate Regulatory News Service announcement released today).

§ Proposed merger update:

- CMA phase 1 review of the proposed merger between Shaftesbury and Capco is underway; deadline for its decision: 22 February 2023.

- Proposed merger expected to become effective during the current quarter, subject to satisfaction or, where applicable, waiver of outstanding conditions to the merger, including receiving CMA clearance.

Buoyant trading conditions over the festive period

The sustained recovery in footfall and trading previously reported continued into the important Christmas and New Year period. Whilst domestic visits to our villages were flat against December 2021, having been impacted by a series of rail strikes, footfall was buoyed by continued growth in international tourist numbers. Across our portfolio, our hospitality, retail and leisure occupiers have outperformed the wider West End, reporting turnover on average 42% ahead of 2021, a period which had been affected by the Omicron Covid variant, and 6% above 2019.

Sustained occupier demand across all uses

Leasing activity remains strong across all uses. Over the three months to 31 December 2022, we concluded leasing transactions with a combined rental value of £8.0 million, comprising:

· commercial lettings and renewals: £3.9 million, achieving rents 5.4% ahead of September 2022 ERVs;

· commercial rent reviews: £2.0 million, 13.8% ahead of previous rental levels and 14.0% above September 2022 ERVs; and

· residential lettings: £2.1 million, 16.7% above previous rents.

At 31 December 2022, the ERV of space held for, or under, refurbishment in the wholly-owned portfolio amounted to £10.0 million, representing 6.9% of portfolio ERV, down 1.4% over the quarter. Schemes with a rental value of £2.5 million (1.7% of portfolio ERV) completed in the quarter, including the first-floor office space at 72 Broadwick Street, and the majority of the retail units at 90-104 Berwick Street.

Following scheme completions in December 2022, EPRA vacancy increased to £6.4 million (4.4% of portfolio ERV) over the quarter to 31 December 2022 (30.9.22: £5.8 million, 4.0%), of which 3.0% was available to let and 1.4% was under offer.

Wholly-owned portfolio valuation at 31 December 2022

The external valuation of the wholly-owned portfolio at 31 December 2022 was £3.11 billion, down from £3.19 billion over the quarter. On a like-for-like basis, taking into account capital expenditure, this represents a decrease of 2.7% since 30 September 2022.

The valuation decrease is largely due to an increase in yields applied to commercial uses of c.15 basis points. Over the quarter, the portfolio's overall equivalent yield increased by 12 basis points to 4.22%, with commercial space valued at 4.6% (30.9.22: 4.4%).

Finance

At 31 December 2022, net debt was £826.6 million (30.9.22: £804.6 million), representing a loan-to-value ratio of 26.5%, up from 25.2% over the quarter largely due to the valuation decrease.

As previously announced, our £100 million revolving credit facility matures in February 2023 and, in view of the proposed merger with Capco, will be retired as it will no longer be required given the other sources of liquidity in the combined group. At 31 December 2022, available liquidity, excluding the revolving credit facility, totalled £133.2 million.

We remain compliant with the financial covenants in our debt arrangements.

Merger update

The proposed merger with Capco remains subject to satisfaction or, where applicable, waiver of the remaining conditions set out in Part Three of the Scheme Document, including receiving CMA clearance and the Scheme being sanctioned by the Court.

On 23 December 2022, the CMA announced the launch of its phase 1 review, with a deadline for its phase 1 decision on 22 February 2023.

Interim dividend for the three-months ended 31 December 2022

In accordance with previously announced arrangements to facilitate the payment of dividends by Shaftesbury and Capco, the Board has today declared an interim dividend of 2.7p per share in respect of the three-month period ended 31 December 2022  (the "Shaftesbury Q1 2023 Dividend"), comprising 2.1p as a PID and 0.6p as an ordinary dividend. The dividend is to be paid on 15 February 2023. The ex-dividend and record dates are 2 February 2023 and 3 February 2023 respectively. This dividend timetable has been agreed with the London Stock Exchange to facilitate the implementation of certain ongoing steps with respect to the Merger. Further details are set out in a separate Regulatory News Service announcement released today.

30 January 2023

This announcement includes unaudited financial information in relation to the quarter ended 31 December 2022

For further information:

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

Notes for Editors

Shaftesbury is a Real Estate Investment Trust which invests exclusively in the heart of London's West End. Focused on food, beverage, retail and leisure, our portfolio is clustered mainly in Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in East and West Covent Garden, Soho and Fitzrovia.

Extending to 16.4 acres, the portfolio comprises over 600 restaurants, cafés, pubs and shops, extending to 1.1 million sq. ft., 0.5 million sq. ft. of offices and 632 apartments. All our properties are close to the main West End Underground stations, and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street.

In addition, we have a 50% interest in the Longmartin joint venture, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our purpose

Our purpose is to contribute to the success of London's West End by curating lively and thriving villages where people live, work and visit. Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. We have an experienced and innovative management team focused on delivering our long-term strategic objectives.

Our values

We have five core values that are fundamental to our behaviour, decision making and the delivery both of our purpose and strategic objectives: being human in how we operate, original in how we nurture talent and think, community minded in our approach to the West End, being responsible and long-term in our approach to everything.

Our approach to sustainability

Our sustainability strategy encompasses our long-established approach of reducing the environmental impact of our operations through refurbishment, change of use and reconfiguration, working with, and supporting our local community, and using our knowledge and experience to influence and motivate, to achieve positive outcomes.

Further information

This document is for information purposes only and should not be relied on as an indicator of future performance. The information in this document is not intended to be an invitation to deal in the securities of Shaftesbury and does not constitute, or form part of, any offer to sell or issue, or any solicitation of an offer to purchase, subscribe for or otherwise acquire, or the solicitation of any offer to dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. Nothing contained in this document, the latest Annual Report or Shaftesbury's website should be construed as a profit forecast.

Forward-looking statements

This document, the latest Annual Report and Shaftesbury's website (each case including any information incorporated by reference) and other information published by Shaftesbury contain statements which are, or may be deemed to be, "forward-looking statements". These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Shaftesbury about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. The forward-looking statements contained in this document may include statements relating to the expected effects of the Merger on Shaftesbury, the expected timing of the Merger and other statements other than historical facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "targets", "hopes", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases of similar meaning or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. These statements are based on assumptions and assessments made by Shaftesbury in light of its experience and perception of historical trends, current conditions, future developments and other factors it believes appropriate.

Although Shaftesbury believes that the expectations reflected in such forward-looking statements are reasonable, Shaftesbury can give no assurance that such expectations will prove to be correct. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the commercial property industry; changes in government policy and taxations; changes in political conditions, economies and markets in which Shaftesbury operate; changes in the markets from which Shaftesbury raise finance; the impact of legal or other proceedings; changes in accounting practices and interpretation of accounting standards under IFRS; changes in interest and exchange rates; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this document.

Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither Shaftesbury, nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Other than in accordance with their legal or regulatory obligations (including under the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA), Shaftesbury is not under any obligation, and Shaftesbury expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Ends.