Shaftesbury PLC Trading and finance update (4301P)

TIDMSHB

RNS Number : 4301P

Shaftesbury PLC

08 February 2019

Shaftesbury PLC

Trading and finance update

Shaftesbury PLC, the Real Estate Investment Trust that owns a 15 acre portfolio in the heart of London's West End, today announces a trading and finance update for the period 1 October 2018 to 7 February 2019. The announcement is being issued prior to the Company's Annual General Meeting, which is being held later today.

Highlights

 
 
               *    Robust footfall and trading over the festive period. 
 
 
               *    Resilient demand for our regular space; occupancy 
                    remains high. 
 
 
 
               *    Good leasing activity: lettings, renewals and rent 
                    reviews with a rental value of GBP9.3m concluded 
                    since 1(st) October 2018, at or above 30 September 
                    2018 ERV. 
 
 
               *    Progress with our larger schemes: 
 
 
               *    Thomas Neal's Warehouse - let. 
 
 
               *    Central Cross - 71% let or under offer. Just three 
                    shops remain available. 
 
 
               *    72 Broadwick Street - planning application submitted. 
 
 
               *    Value-enhancing schemes extending to 165,000 sq. ft. 
                    underway. 
------------------------------------------------------------------------- 
 

Brian Bickell, Chief Executive, commented:

"During the important trading season leading up to and including the Christmas and the New Year holidays, footfall in our locations has been robust and our occupiers generally reported growth in turnover compared with the same period in 2017. In contrast to reports of subdued leisure spending nationally, our restaurants, cafes, pubs and bars were particularly busy throughout the festive period."

8 February 2019

For further information:

 
 Shaftesbury PLC 020 7333 8118     RMS Partners 020 3735 6551 
  Brian Bickell, Chief Executive    Simon Courtenay 
  Chris Ward, Finance Director 
                                   MHP Communications 020 3128 8100 
                                    Oliver Hughes/Reg Hoare 
 

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

Overview

London, the largest city in Europe, has a global reputation and appeal which underpins its dynamic, broad-based economy and long-term prospects. Its many unique features provide a considerable degree of insulation from the impact of UK political uncertainties, particularly relating to Brexit, which are continuing to adversely affect both business and consumer confidence nationally.

Our 15 acre portfolio, comprising c.600 buildings, is located in the heart of the West End. Its 1.1 million sq. ft. of restaurant, leisure and retail space provides some 68% of our rental income. With an exceptionally large and diverse catchment of nearly nine million Londoners, a huge local working population and unrivalled numbers of domestic and international visitors, the West End offers a busy, seven-days-a-week trading environment and access to a relatively affluent customer base. This demographic is unmatched by any other UK location. Together with the long-term curation of our lively, iconic destinations, this provides occupiers with the stage set for prosperous trading and drives sustained demand for all uses across our portfolio.

Trading

During the important trading season leading up to and including the Christmas and the New Year holidays, footfall in our locations has been robust and our occupiers generally reported growth in turnover compared with the same period in 2017. In contrast to reports of subdued leisure spending nationally, our restaurants, cafes, pubs and bars were particularly busy throughout the festive period.

Leasing and occupancy

Occupancy levels in our sought after locations remain high and we continue to see resilient demand for our regular space. Since 1 October 2018, we have concluded lettings, lease renewals and rent reviews in the wholly-owned portfolio with a rental value of GBP9.3 million, achieving rental levels at or above ERVs at 30 September 2018. As reported previously, potential occupiers contemplating large rental or fit-out commitments, particularly for retail space and where they already have significant exposure to the UK market, continue to be cautious.

EPRA vacancy(1)

 
                             % of total ERV 
-------------------  -----  ----------------- 
                      ERV 
                      GBPm  31.12.18  30.9.18 
-------------------  -----  --------  ------- 
 Larger schemes(2) 
 Ready to let         1.1     0.8%     0.6% 
 Under offer          0.6     0.4%     1.3% 
                     -----  --------  ------- 
                      1.7     1.2%     1.9% 
                     -----  --------  ------- 
 Other vacancy 
 Ready to let         2.7     1.9%     1.5% 
 Under offer          1.8     1.2%     1.2% 
                     -----  --------  ------- 
                      4.5     3.1%     2.7% 
-------------------  -----  --------  ------- 
 
   1.     Wholly-owned portfolio 
   2.     December 2018: Central Cross; September 2018: Thomas Neal's Warehouse and Central Cross 

Larger schemes

Thomas Neal's Warehouse

During the quarter, we announced the letting of Thomas Neal's Warehouse for an exciting new food market concept, which will trade under the name "Seven Dials Market". The space is now being fitted out, and we expect it will be open for trading in late summer 2019.

Central Cross

Currently, 71% of the scheme's rental value has been contracted or is under offer. Just three shops (ERV: GBP1.1 million) remain available.

Other EPRA vacancy at 31 December 2018 was 3.1% (ERV: GBP4.5 million), of which 1.2% (ERV: GBP1.8 million) was under offer.

Space held for or undergoing refurbishment(1)

 
                               % of total ERV 
---------------------  -----  ----------------- 
                        ERV 
                        GBPm  31.12.18  30.9.18 
---------------------  -----  --------  ------- 
 72 Broadwick Street    4.0     2.8%     2.8% 
 Other schemes          6.5     4.6%     4.8% 
                       -----  --------  ------- 
 Total                  10.5    7.4%     7.6% 
---------------------  -----  --------  ------- 
 
   1.     Wholly-owned portfolio 

At 31 December 2018, space held for or undergoing refurbishment extended to some 165,000 sq. ft. and represented 7.4% of total ERV.

At 72 Broadwick Street, we have submitted a planning application to introduce new retail, restaurant and leisure uses, extend and refurbish the remaining office space, and reconstruct the residential accommodation. If our application is approved, we expect to start our works on this 65,000 sq. ft. scheme in the summer.

At 31 December 2018, other schemes underway extended to c.100,000 sq. ft. across 36 projects. The ERV of this space was GBP6.5 million (4.6% of total ERV). We are already seeing encouraging interest in the restaurant element of these schemes.

Acquisitions and disposals

Since 1 October 2018, we have acquired a pub in Fitzrovia for GBP5.6 million (including acquisition costs) and disposed of a non-core asset for GBP2.6 million, 11.7% above book value at 30 September 2018.

As previously reported, the forward-purchase of a long leasehold interest in 90-104 Berwick Street for GBP41 million (including acquisition costs) has been delayed. We currently expect the vendor to complete the development by mid-2019, which, subject to satisfying various contractual conditions, will enable us to conclude this strategic acquisition.

The availability of properties to buy in our locations and which meet our strict criteria has been exceptionally limited in recent months. With continuing macro-uncertainties, we currently expect existing owners will remain reluctant to dispose of assets which offer both security and long-term growth prospects.

Finance

At 31 December 2018, net debt stood at GBP887.9 million. The blended cost of debt remained at 3.2% and our marginal cost of borrowing under our committed undrawn facilities was 1.7%.

Elizabeth Line

It is now expected that the opening of the Elizabeth Line will be further delayed, possibly into 2020. Whilst disappointing, once open, it will bring long-term benefits to the West End. In the meantime, the delay is not having any noticeable impact on appetite for space in our locations, which are uniquely well-placed to benefit from the significant increase in visitors the service is forecast to deliver once it becomes fully operational.

Ends

About Shaftesbury

Shaftesbury is a Real Estate Investment Trust which owns a portfolio extending to 15 acres in the heart of London's West End. Shaftesbury focuses on retail, restaurants and leisure in highly popular, sought-after and prosperous locations mainly concentrated in Carnaby, Seven Dials and Chinatown but also include substantial ownership in East and West Covent Garden, Soho and Fitzrovia.

The portfolio comprises nearly 600 shops, restaurants, cafés and pubs, extending to 1.1 million sq. ft., 0.5 million sq. ft. of offices and 593 apartments. All our properties are close to the main West End Underground stations, which currently handle c. 228m passengers p.a., and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street, which long-term projections indicate could be handling 200 million passengers annually.

In addition, we have a 50% interest in the Longmartin joint venture, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. We have an experienced management team focused on delivering our objective of long-term growth in rental income, capital values and shareholder returns. We have a strong balance sheet with conservative leverage.

Forward-looking statements

This document may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by, or on behalf of, Shaftesbury PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Shaftesbury PLC does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this document relating to Shaftesbury PLC or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

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February 08, 2019 02:00 ET (07:00 GMT)