Property group to tackle real estate industry challenges ‘head on’ after £37m write down

IM Properties' Solihull HQ

IM Properties (IMP) has pledged to tackle the challenges facing the real estate industry head on, after the write down of its retail assets has reduced pre-tax profit from £61m to just under £24m.

Re-adjusting the group’s portfolios to take account of its retail holdings stripped £35m from its headline earnings.

Tim Wooldridge, managing director of IM Properties (IMP), said the group, which has its HQ in Solihull, had now “rebased” its investment portfolio, recognising the current difficulties within the retail and leisure sectors.

Without revaluation, headline profits would have been virtually at 2018 level.

“The challenges facing ‘bricks and mortar’ retail have been compounded since our financial year ended, and recent events in the property sector have underlined the particular problems for High Street retail,” he said.

”Our total return on capital employed for 2019 was ahead of the market at 4%, we ended the year with cash reserves of £57.4m, and despite the impact of Covid-19, we achieved rent collections of 87% during our Q1, which is at the top end of industry performance.”

Wooldridge revealed that the group now controls development sites, mainly in the Midlands, which could bring forward 15m sq ft of logistics and distribution space with a gross development value in excess of £1.5bn.

Schemes under construction include Mercia Park at J11 of the M42 where there is consent to build over 3m sq ft of logistics space, and Hinckley Park where there is strong occupier interest in IMP’s 532,000 sq ft speculative distribution unit.

He also used the occasion to highlight IMP’s hopes that the real estate sector would become a tangible force for good as the economy emerged from lock-down.

“The world has undoubtedly changed over the past few months, people have found new ways to work, reconnected with their community, appreciated the outdoors and as an industry, we touch on all these areas through the workplaces, new homes and communities we create.

“Like many businesses, we have found elements of the real estate market that we operate within being disrupted at an extremely fast pace. However, the diversified structure of our group provides us with a stable base, with positive cash generation from our core investments, enabling us to remain resilient throughout the pandemic.

“We are looking to innovate and develop effective strategies surrounding sustainability, social value and governance. We have completed a rigorous six-month gap analysis of the business in order to deliver real and sustainable change for our stakeholders and the built environment we create.

“Creating a positive legacy has become integral to the delivery of large scale development, and this has seen us launch community initiatives totalling over £500,000 including during the lockdown, the launch of a £350,000 fund for our Mercia Park scheme, to allocate grants to projects which strengthen community or help promote the natural environment.  In addition to this, the IM Group has donated over £50m to charitable causes in the past three years as part of our commitment to make a positive difference.”

Wooldridge added: “We will continue to invest in our schemes and embrace advancements in technology in order to provide market leading working environments for our occupiers. Moving into a post Covid world, it will be more important than ever to anticipate change and the pace of it. To that extent, the future is in our hands. It will no doubt be challenging, but it will be exciting all the same.’’

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