Retail revaluations result in losses at property group
Property group Town Centre Securities (TCS) has highlighted its solid foundations after retail revaluations resulted in a £12.5m pre-tax loss.
The Leeds-based developer’s £400m portfolio includes the Merrion Centre and The Cube alongside other prominent sites in the Arena Quarter and city centre. It also has assets in Manchester, Glasgow and London.
Chairman Edward Ziff said: “We have delivered a robust underlying performance, whilst continuing to re-position the portfolio for the long-term and maintaining our 59-year dividend record, despite a challenging retail sector context and ongoing economic uncertainty.”
It suffered a 3.8% like-for-like decrease in the value of its portfolio, which it said was “all driven by devaluations of retail assets”.
The Merrion Centre, which accounts for nearly one-quarter of the portfolio’s value, was revalued down 6.6%.
Ziff said: “Short-term fluctuations in valuations do not shake our confidence in our business model and conservative management approach.”
TCS saw eight tenants either enter administration or launch a CVA during the year. It re-let four units to new tenants while the incumbent retailer stayed at the same rent in three units.
In line with other property groups, it has sought to reduce its exposure to retail. Its retail and leisure assets now account for less than 50% of its portfolio value – down from 70% in 2016 – while the pure retail proportion is 36%.
“Although we see an ongoing role for the type of retail assets that we own in the areas we know intimately, we continue to increase our exposure to non-retail sectors,” said Ziff.
TCS sold Rochdale Retail Park in January for £13.2m, having bought The Cube in Leeds for £12m three months earlier.
The group’s share price has struggled and has lost 40% of its value in the last 15 months. Last night hit a seven-year low of 171p, giving the property group a market value of £90m.
Ziff said the “deeply discounted share price” meant the board was considering a share buy-back.
He said: “Given the current sector challenges and the growing gap between our share price and the underlying value of the business, we continue to look at our potential strategic options.”
