Merrion Centre revaluation hits property group’s profits
Property investor and car park operator Town Centre Securities has seen a mixed bag in its half-year update with successes at Merrion Centre and Whitehall offset by a decline in property values.
Investment properties were valued at £333.3m at 31 December 2016, and while last year’s valuation movement was up £7.6m, this year it is down £2.8m.
This resulted in a fall in pre-tax profits from £11.6m to £2.6m for the half year, despite revenues in the six months to December 2016 staying steady at £13.6m.
TCS said that the valuation movement was made up of a deficit of £4.9m on investment properties, including a £5.6m reduction on the Merrion Centre becuase of “yield shift”.
It was only partially offset by a surplus of £2m on development land. The other main movement was County House in Leeds, which was up £1m due to its location at the entrance to the new Victoria Gate shopping centre.
The initial yield on the investment portfolio is 5.7% at 31 December 2016, the same as in June 2016.
The company has invested in major projects over the year, including the Premier Inn at Whitehall Road in Leeds which is now complete and a reserved matters application has been secured at Whitehall Riverside Leeds.
Edward Ziff, chairman and chief executive said: “Our portfolio remains resilient and we expect this to continue, despite the investment market being very slow due to investor caution following the Brexit vote in June 2016.
“We were pleased to complete the letting of the new Arena Quarter in the Merrion Centre, which saw record footfall in 2016 and continues to be a leading asset in the region. Our development programme is progressing well, with two hotels opening soon, and is expected to generate significant capital and income growth into the portfolio.
“We believe that the current low interest and low growth environment is here to stay for the foreseeable future; however, our portfolio is rich with opportunities to grow our income and profits and therefore our net asset value.”
