LONDON (ShareCast) - (Sharecast News) - Property investor and car park operator Town Centre Securities updated the market on its half-year ended 31 December on Monday, reporting that it continued to make "good progress" in the on-going repositioning of its portfolio.
The London-listed firm said that since July, it had undertaken further asset recycling, made progress in the next phase of its development programme, and completed the innovative refinancing of Merrion House.

Overall, continued asset recycling had reduced the proportion of retail and leisure assets to 52%, down from 70% in 2016.

The company said it continued to produce consistent operational metrics, critical to delivering stable long-term underlying financial performance, despite the challenging market.

On the trading front, Town Centre said its overall occupancy level increased to 96% from 95% in June, while its like-for-like passing rent rose by 0.9% compared to a year ago, supported by the updated Merrion House lease to Leeds City Council.

Rent collection remained "strong", with 99% of rents collected within a week of the quarter commencing.

The company's CitiPark operation continued to grow its revenues and profits, with Town Centre also reporting that the refinancing of Merrion House had enhanced its financial flexibility, and provided an immediate benefit to its leverage ratios.

Looking at its portfolio, the company said the most recent asset sales and purchases activity had further reduced the proportion of retail and leisure assets to 52%, down from 70% in 2016.

The sale of Rochdale Central Retail Park occurred for £13.2m in December, with the asset previously generating £1.15m annual net rent.

Town Centre also highlighted the previously-announced acquisitions of The Cube in Leeds for £12.8m, a retail unit in Gordon Street, Glasgow for £2.6m, and a retail and residential unit on Chiswick High Road, London for £1.7m.

In total, those acquisitions would generate ongoing annual income of more than £1.4m.

Whilst Town Centre Securities said it had seen some disruption from retail and leisure administrations and CVAs, its experience in active asset management would result in ongoing rents rising due to an enhanced mix of replacement tenants.

It had seen eight company voluntary arrangements (CVAs) or insolvencies from tenants in the last 12 months, including Poundworld and Mothercare, representing 2.5% of its total rent roll.

By December, six of the eight units had been re-let with rent ahead of previous levels, with new tenants including Iceland and The Works.

The two most recently vacated units were being actively marketed, accounting for 0.5% of the total rent roll.

Town Centre securities said it was continuing to focus on property acquisition and development opportunities in Leeds and Manchester, which it believed had "excellent" prospects.

The joint venture with Leeds City Council to develop a 126-room 'apart-hotel' with additional ground floor units on George Street had received detailed planning consent, with work anticipated to begin this year.

In Manchester, Town Centre said Burlington House - a 91-unit residential private rented scheme being developed in joint venture with Highgrove - was on track to achieve practical completion in May.

Eider House, its next PRS development in Piccadilly Basin, Manchester, which had detailed planning consent, was expected to commence ground works this year.

"We continue to improve our portfolio and maintain our track record of managing the business for long-term success, notwithstanding that the combination of Brexit uncertainty and continued seismic change in retailing makes it a tougher environment in which to operate," said Town Centre Securities chairman and chief executive officer Edward Ziff.

"This means the importance of our development pipeline, that we have built up over time into a sizable opportunity, is clearer than ever."

Ziff said the company's expertise in active asset and tenant management had resulted in TCS improving future income levels from properties vacated due to company voluntary arrangements and insolvencies.

"Furthermore, while we reduce the overall proportion of retail in our portfolio, the resulting greater focus on supermarket and convenience retailing is helping de-risk the Company from the worst of the high street disruption.

"We remain optimistic about TCS's prospects and the opportunities in our development pipeline."

Town Centre Securities said it expected to issue its results for the half-year ended 31 December on 26 February.

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