Listed TCS continues to reduce retail reliance as it predicts ‘no short-term cessation’ in disruption

Leeds-headquartered property investment and car parking operator Town Centre Securities (TCS) has said its financial year has been strong as it continued to reduce its reliance upon the retail sector as it predicts “no short-term cessation” of the industry’s disruption and financial pressure it places on the company.

Updating the markets on its financial year ended 30 June 2019, TCS said like-for-like (LFL) passing rent was up 2.6% (2017: 4.1%) and that its overall occupancy level stood at 96% (June 2018: 95%). 

TCS said it had made further “important improvements” to its property portfolio in the past 12 months, delivering its strategy of recycling ex-growth assets and reducing the proportion of retail assets in the portfolio.

The firm added: “Retail CVAs and administrations have become widespread and highly publicised in recent times. The relative strength and focus of TCS’s retail portfolio, with no exposure and reliance upon the big high street names, has helped mitigate the impact to a relatively modest level.

“In the past year the Company experienced eight tenants either going into administration or launching a CVA. Of those eight units, three have been re-let to new tenants and a further three have seen the incumbent retailer choose to remain at the same rent, leaving two units now void and in the process of being re-let. These two units represent 0.5% of the total rent roll.

“Across those properties, once re-let or where occupancy has continued, we have actually seen a modest 1% increase in base rent. Clearly, there is a short-term cost to the Company in the form of void periods and new tenant incentives, however the speed with which we ensure that the units are occupied is testament to the quality of our portfolio.

“We see no short-term cessation to this level of retail disruption and the financial pressure it puts TCS under. We therefore continue to pursue our strategy of reducing our exposure to retail and reinvesting to reposition the portfolio even if this impacts income in the short term.”

The listed firm named the sale of Rochdale Retail Park for £13.2m in January 2019, acquisition of The Cube in Leeds for £12m in October 2018 and practical completion of a Manchester Private Rented Scheme (‘PRS’) in June 2019 as highlights. 

Edward Ziff

Edward Ziff, Chairman and Chief Executive, added: “We continue to improve the business for the long term in line with our strategy of repositioning our portfolio, strengthening it through asset management and investing in our development pipeline. I am particularly pleased with the completion of Burlington House, our Private Rented Sector property in Piccadilly Basin, Manchester. It is a high-quality asset and its early popularity re-enforces our belief in the wider Piccadilly Basin development opportunity.

“We have been able to mitigate the continued disruption within the Retail sector, through our proven ability to quickly re-let units impacted by CVAs and administrations while improving rents; this highlights the quality of our assets and the fact that stronger performing retailers trade well within them. We are not complacent however, and our sale this year of Rochdale Retail park reinforces our willingness to continue to focus on recycling our portfolio, this freeing up funds for investment and development.”

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