Town Centre Securities makes solid progress in first half

Leeds-based property investor and car park operator Town Centre Securities updated the market on its financial half-year ended 31 December 2017 on Monday.

The London-listed firm reported that it continued to make “good progress” in the on-going strengthening and improvement of its portfolio, and in the CitiPark car parking operation.

Since the year end results reported on 13 September last year, the board said it had undertaken further asset disposals, been appointed development and joint venture partner with Leeds City Council in a key new scheme, and was due to complete the Merrion House development in the next few weeks on time and budget.

Additionally, it said its residential scheme in Manchester was progressing “well”.

On the trading front, Town Centre said its like-for-like passing rent was up by 2.2%, compared to 2.3% at the end of June, while its overall occupancy level was 99%, in line with the start of the period.

Rent receipts for the current quarter were 99% collected within four days of the quarter start, and Merrion Centre trading remained “strong” with the board saying it was continuing to grow its rental income.

CitiPark revenues and profits were also both said to be growing.

Looking at its development focus, and following the successful opening of two hotels in Leeds, Town Centre said it was further improving its portfolio and enhancing future returns with a number of developments.

It said the Merrion House development was on track to complete on time and budget in January, while at its residential programme at Piccadilly Basin, Manchester, Burlington House was under construction and due for completion in May 2019, with Eider House now having full planning approval.

Town Centre had also been selected by Leeds City Council to develop a major new scheme in George Street that would deliver a 117-unit aparthotel with a further nine commercial units.

The development of Brownsfield Mill, Manchester - in partnership with Urban Splash - into loft style city apartments was also ready to commence.

“Town Centre Securities continues to seek to maximise revenue delivery from its existing estate, with intensive asset management being a critical part of our ongoing strategy,” the board explained in its statement.

“In the last six months a number of significant improvements have been delivered with new leases and rent reviews at the Merrion Centre, our Vicar Lane site opposite the Leeds Victoria Gate centre, in Manchester, and in Glasgow all driving improvements in income.

“Furthermore, our ibis Styles hotel in Leeds, which opened in April 2017 and is operated under a management agreement, has performed strongly in its first nine months of trading.”

In December, Homebase vacated part of the company’s property adjoining Waitrose in Milngavie.

While the property would remain empty for a period, the board said it saw it as an opportunity to increase the income potential and strengthen the offer of the site by splitting the unit.

Looking at disposals, Since the June 2017 year-end the company disposed of another property in Edinburgh in September for £6.3m, in line with its valuation.

Disposals made over the last 12 months comprised four properties sold for over £25m in total, all at, or above, valuation.

“The disposals have provided capital to invest in our development programme,” the board said.

“On an annualised basis the combination of the two new hotels and the increase in Merrion House rents will more than offset the £1.5m income lost due to these disposals.”

The company’s CitiPark business was also continuing to deliver income and profit growth year-on-year, with “promising” improvements seen in its more recently acquired operations.

The board said it recently took a further 5% stake in YourParkingSpace.co.uk, taking its share to 15%.

Town Centre said it was “very excited” about the prospects of the business - a website and mobile application that matches customers to available car parking spaces across the UK.

On the governance front, Town Centre recently announced the appointment of Jeremy Collins - the former John Lewis property director - to the board as an independent non-executive director.

Collins’ appointment would be effective from 1 February, with the board saying he was bring 35 years of commercial property experience and a “unique perspective” on retail development.

The appointment continued the board’s succession planning, with three new non-executive directors, a new executive director and a new finance director appointed over the last three years.

“We continue to successfully deliver considerable change within our portfolio,” said Town Centre Securities chairman and chief executive Edward Ziff.

“The combination of asset recycling, intensive asset management, and a strong development pipeline ensure that our future potential is being enhanced, whilst providing new opportunities for growth in income and valuations.”

Ziff said the strength of the company’s “unique” portfolio, and the success of its most recent development phase allowed it to be “bold” in the sale of more mature assets.

“Furthermore, the strength of our CitiPark business continues to support financial delivery, whilst also bringing new opportunities such as YourParkingSpace.co.uk.

“We look forward to the future with confidence.”

The board said it expected to issue its final results for the half-year to 31 December on 26 February.