Profits rise at Yorkshire property developer
PROFITS have risen at Yorkshire property investor, developer and car park operator Town Centre Securities (TCS).
In its final results for the year ended June 30 2014, Leeds-based TCS, which owns the Merrion Centre, reported underlying profit before tax and exceptional items of £7.6m, up from £7.3m, (excluding property revaluation) and said this result was ahead of expectations.
Statutory pre-tax profit (including revaluation gains) shot up to £27.4m from £3.6m last year, which TCS said reflects the property revaluation surplus of £19.8m this year (2013 deficit £3.8m).
On a like-for-like basis, the investment portfolio showed an increase in value of £27m, or 9.9%. TCS reported gross revenue of £22.6m, a slight increase from £22.4m.
Chairman and chief executive Edward Ziff, who has worked at the business for 33 years and is in his 11th year as chairman, said: “We have produced another strong trading performance and our properties are now starting to show some of the growth which we have seen in London recently.
“Our returns to shareholders are showing the benefit of our continuing intensive management and regular churning of the portfolio. Recent letting deals in the Merrion Centre have been exceptional and we have seen excellent growth in value as well. The car park business has also out performed. We remain conservatively funded and committed to delivering superior cash returns to shareholders.”
The board is recommending a final dividend of 7.34p per share, which, together with the interim dividend of 3.1p per share, provides an unchanged total dividend of 10.44p per share.
The strongest performing property was Leeds city centre’s Merrion Centre, which is celebrating its 50th anniversary this year, with a 16.3% increase in capital value. Highlights of the year at the Merrion Centre included a significant lease renewal with Morrisons which will result in an expansion of their store by around 20% and will add approximately £500,000 per year to rental income.
Ziff said that throughout his time at TCS, the company’s strategy has been clear and constant – to produce exceptional cash returns for shareholders.
“We are extremely proud of our achievements – an investment of £1,000 in 1969 would now be worth £562,700. Against a sector average of £297,900 this is the third best out of 12 comparable property companies.
“These returns have been achieved through a combination of intensive management of our assets along with a conservative management style. We have extensively churned the portfolio in recent years to ensure that our funds are invested where there is likely to be growth. Our property management team have completed 184 transactions in the year in the process of maximising returns from the portfolio.”
TCS was founded with a capital of £1,000 on March 17 1959 and was listed in 1960. The firm also has assets in London, Manchester, Edinburgh and Glasgow.
TCS continues to work with Leeds City Council on Merrion House.
The property group and Leeds City Council agreed the largest office pre-let deal in Leeds city centre in more than 20 years at the end of last year. The existing Merrion House is to be completely refurbished while a new extension is to be added to provide a new one stop centre for all main council services in the city centre.
The deal will lead to the construction of 50,000 sq ft of new office space together with a complete refurbishment of the existing offices creating 170,000 sq ft of purpose designed space. Upon completion the Council will take a new long lease and become a co-owner. The valuation of TCS’ share of the asset will significantly increase as well as adding around £250,000 per year to rental income.
Construction is scheduled to start next year for occupation in 2017.
At Whitehall Riverside in Leeds, TCS has detailed planning consent for a 128-bedroom hotel and outline consent for 600,000 sq ft of mixed use development including three eight-storey office buildings and a 500 space multi-storey car park. TCs said it is pursuing a number of preliminary discussions as it continues to maximise our development gain.
Looking ahead, Ziff said: “As we emerge from the problems of recent years we are seeing some extraordinary figures emanating from London and the South East. While we have seen growth in the regions it has been and remains patchy.
“In this environment it is extremely important to keep focused on hands-on intensive management, to be selective in acquisitions and to sell assets which do not fit this strategy.
“We expect to see continued growth from the Merrion Centre as we continue with its regeneration and we are optimistic about our Scottish portfolio once the disruption from the referendum settles down. Manchester as a city remains active and we hope to make further progress this year. We have also started investing selectively in London, particularly in suburban shops.
“We expect to see good performance from all these sectors this year along with the expansion of the car park business; and we look forward to continuing to provide shareholders with above average cash returns.”
