Profit warning for listed property investor’s car parks operation

Leeds-based property investor and car parking operator Town Centre Securities (TCS) says its CitiPark car parking business has been hardest hit by the COVID-19 emergency.

The company has this morning warned that despite cost cutting – including the temporary closure of seven branches – the impact of fixed costs such as rents and rates will result in a “significant reduction in profitability” for CitiPark.

TCS says it is however making progress to collect rental payments from tenants.

For the cumulative rent payments that have fallen due since the outbreak of COVID-19, of the £6.6m rent and service charge billed TCS has managed to collect £5m (or 75%), with a further £0.7m (11% of payments) it has agreed to defer, totalling £5.7m or 86% of the amount due.

Of the £0.9m remaining, TCS has says it has agreed certain concessions for over £0.3m of this amount, in return for an improvement in the terms or length of the lease.

And for the balance of £0.6m, the company says it is continuing to attempt to reach a fair conclusion with the tenants.

TCS notes that over a third of its retail and leisure portfolio, which makes up just less than half of the asset base, is currently open and trading.

Edward Ziff

Its update adds: “We are now making detailed plans in order to be ready to open all of our locations from 15 June, in line with Government guidelines.

“The Board has decided to continue with its payment of the previously announced 3.25p per share interim dividend at a total cost of £1.7m, payable on 26 June 2020 to shareholders registered on 29 May 2020.

“This decision is based on a review of cashflow forecasts and various operating scenarios and also recognises the fact that this dividend relates to the six month period ended 31 December 2019.

“Clearly, significant uncertainty remains around the level of rent receipts for the next quarter, payable at the end of June, and the rate of recovery in the car park business.

“The decision regarding payment of any final dividend, which, if paid, is expected to be substantially lower than in the prior years due to the effect of the crisis, will be considered as part of the announcement of the full year results in September, but we may choose to defer the decision beyond that date.”

Edward Ziff, TCS chairman and chief executive, said: “I am pleased with the progress made in rent collections during this period of disruption, although we have experienced a wide range of responses from tenants.

“These continue to be unprecedented times and we are working tirelessly to support all of our stakeholders whilst remaining in close dialogue with tenants.

“We are doing everything possible to manage TCS through this challenging period with the long-term sustainability of the business being our primary aim and focus, recognising that we are now operating in an uncertain environment which will impact our current and future financial performance.

“However, we are proud of our dividend history and believe strongly it is both appropriate and responsible to pay the declared interim dividend for the period ended 31 December 2019.”