Listed property development firm drops into the red

Town Centre Securities (TCS), the Leeds-based property investment, development and car parking company, has reported pre-tax losses of more than £8m at the half year mark of its 2018 financial year.

For the six month period ending 31 December 2018, the listed firm has reported a pre-tax profit loss of £8.7m, compared to a pre-tax profit of £12.4m at the same time the year prior.

TSC said that this significant drop in profits was loss a result of “unrealised valuation movements and a loss on sale of an investment property.”

EPRA earnings for this period also decreased by 8.8% to £3.7m (2017: £4.0m) and EPRA earnings per share decreased to 6.9p (2017: 7.6p). The firm’s like-for-like portfolio decreased in value by 2.2%, which is said was due to the unrealised revaluation deficit incurred of £11.2m (2017: increase of £6.4m).

However, an underlying improvement was seen in the firm’s rental income, driven partly by the reported like-for-like rental increase, as well as the net benefit of asset sales and purchases. In addition, TCS’ car parking business, CitiPark, reported a £400,000 year-on-year increase in income.

During this period, TCS also presented a new development scheme at Leeds city centre’s Merrion Centre for planning approval. The proposal is for a 17-storey office development to be known as 100MC, and would include over 168,000 sqft of commercial office space, being a place of work for over 2,000 people.

With an estimated GDV of over £60m, and a build cost of over £50m, if planning consent is achieved TCS will need to put in place funding for the development.

Edward Ziff, chairman and chief executive said: “Our focus remains on continuing to deliver our strategy, weathering the variations in valuations and market sentiment, and continuing to build on the intrinsic strength of the business. Our sixty years of history has taught us to treat property investment as a long-term undertaking – TCS’s strength lies in our conservative management approach and our focus on long-term opportunities.

“Whilst it is disappointing to report half year valuation reductions and profits slightly down due to short term market fluctuations and some one-off costs, I remain confident in the quality and potential of our portfolio and the changes we are making to it. Our substantial development pipeline also underlines the opportunity for meaningful long-term growth. This confidence is reflected in continuing our long history of increasing or maintaining our dividend.”