Resetting exercise will help property and car parks group bounce back
Property and car parks operator Town Centre Securities has undergone a ‘resetting’ period caused by the coronavirus pandemic, but is confident of bouncing back from its current tribulations.
The listed Leeds-based group, which also has significant operations in Manchester, reported revenues of £10.436m for the six months to December 31, 2020, compared with a turnover of £15.892m the previous six months in 2019.
A pre-tax loss of £241,000 in 2019 increased into a pre-tax loss of £3.518m for the most recent six month period.
It said it has been subject to an “extraordinarily one sided” arrangement during the pandemic where it has had to pay car park rent and business rates, while volumes have suffered throughout the series of lockdowns affecting town centres.
But chairman and chief executive, Edward Ziff, said its actions will enable it to bounce back once the current lockdown period comes to an end.
The group announced that £41.2m of targeted retail asset sales during the first half has reduced absolute borrowing levels by 20% to £147.6m at December 2020, compared with £183.6m at June 30, 2020.
Financial headroom of £12.8m at the half-year end, based on December 2020 borrowings and valuations, was slightly down on the £14.8m level for fiscal year 2020.
The group is recommending an interim dividend of 1.75p per share, compared with 3.25p in 2020, which it said reflects the anticipated quick recovery of its car parks and hotel once they are able to operate normally, and also the strengthening of the balance sheet following the asset sales completed in the half-year.
Coronavirus has led to an estimated £3.2m impact in the first half, driven by £2.3m at CitiPark due to lost car parking income and fixed costs, £500,000 in the property business, primarily from bad debt, and £400,000 of ibis Styles hotel impact driven by reduced bookings.
Rent receipts remain robust. As at February 22, of the £5.5m rent, service charge and VAT billed for the latest English and Scottish quarter, £4.3m, or 78%, has been paid, with a further £500,000, or nine per cent, agreed to be deferred, totalling 87%. This is consistent with the 89% for the previous billings since March 2020.
Among actions taken to mitigate the impact of the pandemic are the closure of two car parks during the current lockdown to minimise costs, the furloughing of CitiPark operational branch staff, and some head office colleagues, while the TCS board took a 20% salary and fees reduction for six months from April 2020 to September 2020.
The group said: “Our long history of engagement with tenants has ensured equitable solutions have been reached in most instances, and we are continuing to support tenants during the latest lockdown.”
It also confirmed that it has made “meaningful progress” in resetting and reinvigorating the business in the past six months, in particular in the disposal and debt reduction programme.
Progress has been delivered under four key strategic initiatives, including actively managing assets, maximising available capital, acquiring and improving investment assets to diversify the portfolio, and investing in the development pipeline.
Mr Ziff, said: “The past six months have been critical in the resetting and reinvigorating of the business, and I am particularly pleased with both the progress of our disposal programme, and the resilience of the continuing portfolio.
“The reduction in absolute borrowing levels gives both additional security and, as the disposal programme continues, the ability to reinvest in the long term growth opportunities in our development pipeline.”
He added: “COVID-19 continues to have a material impact on profitability.
“Although significant government support has been given to retail and leisure businesses, as a car park operator, we have continued to pay car park rent to our local government landlords, as well as business rates which, to us, seems extraordinarily one-sided.
“I am confident in the ability of our CitiPark business to bounce back strongly once the current lockdown comes to an end.
“Overall, we remain committed to delivering on our accelerated four pillar strategy of: Actively managing our assets, maximising available capital, investing in our development pipelineand acquiring and improving investment assets to diversify our portfolio.”