Listed property investment firm prepares for ‘continued seismic change’ in retailing
Leeds-headquartered property investor and car park operator, Town Centre Securities (TCS), has continued to re-position its portfolio in the last six months to prepare itself for the “continued seismic change” in retailing.
This morning publishing a trading update for the six month period to 31 December 2018, listed TCS said it had seen “some disruption” from retail and leisure administrations and CVAs. The firm added: “Our experience in active asset management will result in on-going rents rising due to an enhanced mix of replacement tenants.
“We have seen eight CVAs or insolvencies from tenants in the last 12 months including Poundworld and Mothercare, representing 2.5% of the total rent roll. By December 2018, six of the eight units had been re-let with rent ahead of previous levels with new tenants including Iceland and The Works. The two most recently vacated units are being actively marketed, accounting for just 0.5% of the total rent roll.”
TCS – which has been shortlisted in this year’s Business Masters Awards – said that since July it had undertaken further asset recycling, made progress in the next phase of its development programme, and completed the refinancing of Merrion House in Leeds. TCS said: “Overall, continued asset recycling has reduced the proportion of retail and leisure assets to 52%, down from 70% in 2016.”
Edward Ziff, chairman and chief executive, said: “We continue to improve our portfolio and maintain our track record of managing the business for long-term success, notwithstanding that the combination of Brexit uncertainty and continued seismic change in retailing makes it a tougher environment in which to operate. This means the importance of our development pipeline, that we have built up over time into a sizeable opportunity, is clearer than ever.
“Our expertise in active asset and tenant management has resulted in TCS improving future income levels from properties vacated due to CVAs and insolvencies. Furthermore, while we reduce the overall proportion of retail in our portfolio, the resulting greater focus on supermarket and convenience retailing is helping de-risk the Company from the worst of the high street disruption.
“We remain optimistic about TCS’s prospects and the opportunities in our development pipeline.”
In the six month period, the firm’s overall occupancy level increased to 96% (June 2018: 95%), like-for-like passing rent rose by 0.9% (FY18: 4.1%) versus a year ago, supported by the updated Merrion House lease to Leeds City Council.
Rent collection remained strong with 99% of rents collected within a week of the quarter commencing.
TCS continues to focus on property acquisition and development opportunities in Leeds and Manchester, which it believes have excellent prospects. In Leeds, a joint venture with Leeds City Council to develop a 126 room Apart-Hotel with additional ground floor units on George Street, has received detailed planning consent and work is anticipated to begin this year.
