Last checked at 19 May 2009 07:00
19 May 2009
TOWN CENTRE SECURITIES PLC
("TCS" or "The Company")
Interim Management Statement
Town Centre Securities PLC, the Leeds based property investment and development company, announces its Interim Management Statement covering the period from 1 January to 18 May 2009.
Overview
Although property values have fallen since our 31 December 2008 valuation, the rate has slowed significantly and we believe the outward movement in yields may have run its course. Our next portfolio valuation will be conducted as at our year end 30 June 2009 in line with our normal practice.
Whilst we can be more confident regarding the stabilisation of values, the tenant environment remains very tough. The flow of administrations, pressure on rents and occupational demand remains a constant challenge. However, our performance continues to prove resilient and we believe that TCS is well placed to maintain its rental income.
TCS is securely financed and our focus remains on protection of existing resources and preservation of capital. Reflecting this, there have been further sales in the second half to date and a number of potential disposals are in solicitors' hands. As a result TCS is well positioned to react to opportunities that will emerge.
Highlights of our activity since the half year ended 31 December 2008 include:
Disposals
The sale of a group of retail properties in York for a total of £10.7m, at an overall initial yield of 7.2%, in February 2009.
The exchange of contracts for the sale of two properties in Leeds for a total of £13.75m, at an initial overall yield of 7.8%, due for completion in May 2009 (as previously announced on 25 March 2009).
Asset Management
Leeds, Merrion Centre - the refurbishment of Town Centre House is complete. Occupational interest in the remaining space is positive although the speed of achieving lettings reflects the slow office market. Home Bargains and Ethel Austin have both now opened for trading in the Merrion Centre bringing additional footfall and income.
Manchester, Deansgate - the refurbishment is complete and Ben Brazil, an established restaurant operator in the north of England, has now opened, trading alongside Staples and Cotswold.
Harrogate, West Park - construction nears completion on this small retail and residential scheme. The two retail units are under offer to good quality tenants. The town houses are now for sale and have attracted interest with the first unit already under offer.
Piccadilly Basin, Manchester - plans are well developed to re-let our 120,000 ft² building with an open A1 retail consent including food. Our preferred strategy is for a mixed retail scheme that will attract tenants as a home/lifestyle destination store. We are confident about the unit's potential and we hope to be in a position to make further announcements with our preliminary results in September.
Rent collection has continued to be satisfactory. At the March 2009 quarter days over 96% of the rent due was collected within seven days. Our bad debt experience remains comfortably within our expectations. Occupancy levels are at 91% (31 December 2008: 92%). Re-letting the retail store at Piccadilly Basin (accounting for 4% of voids) and the refurbished Town Centre House (1% of voids) remain our top priorities.
The broad spread of our tenants (TCS has no tenants with more than three premises), and our focus on the value for money retail sector, has continued to insulate us from the worst of the operational problems that have faced the retail property sector.
Developments
As indicated at the time of the interim results, we are not currently undertaking any development activity, although we continue to be optimistic about the long term potential of the development sites in our portfolio.
Financing
At 18 May 2009, the Company had net debt of £191m (31 December 2008: £203m) which is virtually all at fixed rates.
Two bank facilities, together over £100m, remain available until September 2012 and May 2013 respectively, in addition to £150m of 5.375% quoted debenture stock repayable in 2031.
Following the sales referred to above, net debt is expected to fall further by the year end, 30 June 2009.
The challenge of loan to value covenants remains for many property companies. We have actively addressed the issue, through sales and reorganisation of our debt facilities, and continue to act to minimise the risk of breach. At the same time, our interest covenants remain well covered and are not at risk of breach based on current income. Over the last few months, our peer group has raised significant fresh equity capital. We do not currently believe that it will be necessary for TCS to follow suit.
The current refurbishment programme is substantially completed, no significant refurbishment or development expenditure has been commissioned for over two years, and cost to completion is approximately £1m.
Edward Ziff, Chairman, commenting, said:
"Our substantial exposure to 'value for money' retailing stands us in good stead, and we will ensure that we continue to put the right tenant in the right property paying the right rent".
- ENDS -
For further information, please contact:
Town Centre Securities PLC www.tcs-plc.com
Edward Ziff, Chairman and Chief Executive 0113 222 1234
Smithfield
Reg Hoare / Rebecca Whitehead 0207 360 4900