Parent company Leeds-based Town Centre Securities reported an increase in occupancy levels to 98 per cent at Merrion despite a rapid rise in the number of retailers going bust.
Town Centre’s chairman and chief executive Edward Ziff said: “Merrion has historically always appealed for value for money retailing.
“Since we took over the management of the car park 18 months ago, it has really taken off. We’ve got clever in how we price different times of the day. We’ve seen how we can maximise income in the early morning and late evening and how we can price season tickets.”
Footfall at Merrion rose by 8.3 per cent in the year to December 31.
“The national footfall figures are down. We look to be doing a very good job,” said Mr Ziff.
The new retail project at the centre, which will see the opening of seven new shops facing the arena, is 50 per cent let already.
New tenants include coffee chain Costa, budget gym firm Pure Gym, the buffet restaurant chain Cosmo and a local bar operator.
“We wanted tenants that will complement the arena,” said Mr Ziff.
The seven new retail and leisure units will be completed later this year.
Town Centre said the new units have the potential to add around £600,000 to its annualised rent roll.
An increase in borrowing costs, following refinancing at the end of 2011, resulted in a slight fall in profits in the year to December 31 from £4m to £3.8m.
Town Centre said its underlying portfolio performance was in line with expectations despite the difficult market conditions.
“We have operated in a market lacking consumer and general business confidence for a number of years and we do not expect that situation to change in the short term,” said Mr Ziff.
“We retain a robust financial position with the majority of our funding secured until 2031 and bank funding until 2015 and 2016.”
Town Centre said its portfolio showed considerable resilience during the period with very high occupancy.
It said that rent collections have been very strong with over 99 per cent of rent due collected within five days of the quarter end.
The group is working on plans to refurbish the Merrion Centre multi-storey car park.
Town Centre’s property director Richard Lewis said: “The Merrion Centre car park was built in the 1960s and it now needs upgrading.
“We will deliver a state-of-the-art car park with bay location monitoring so drivers can see which spaces are empty.
“We’re on site with the first phase and it should take 18 months to do the work. Clearly, we’ve got to keep the car park open so it will take longer than if we closed it down.”
Income from car parks rose from £2.3m to £2.5m in 2012, delivering a profit of £1.3m, up from £1.1m in 2011.
The car park business reported revenue growth of nine per cent to £2.5m.
“The performance was particularly strong at the Merrion Centre, where revenue increased by 13 per cent and usage by 20 per cent,” said Mr Ziff.
The group is currently in discussions with Leeds City Council about Merrion House.
“The council is under severe budget pressure and is consolidating 14 offices to three,” said Mr Lewis.
“Merrion House will be one of the council’s prime office buildings.
“They will move out in 2015, the building will be gutted and completely refurbished ready for them to move back in 2017.”
The group made two acquisitions last year, 6/7 Park Row, Leeds and Apperley Bridge, Leeds/Bradford, for a total of £9.7m.
It is in discussion with Lloyds about Park Row. The bank occupies the basement and first floor and the discussions centre on possibilities for the other floors in a desirable location.
Apperley Bridge is the old Barratt shoe business headquarters.
The group is hoping to get plans approved for a change of use to residential.
Barratt will move to more cost effective premises if the planning permission is granted.
Mr Ziff said the group is on the hunt for opportunities to add to its property portfolio and car parking business through acquisitions where it can create value.
The group’s investment properties were valued at £281.6m at the end of December and its development properties were valued at £13.5m.
On a like-for-like basis the investment portfolio reduced slightly in value by £1.6m (0.6 per cent) in the period.
The total valuation movement was £3.6m (1.3 per cent) after adjustment for capital expenditure and £400,000 of acquisition costs.
The initial yield on the investment portfolio is 6.9 per cent, down from 7.1 per cent at the end of June 2012.
Sadness as two firms call in administrators
Two stores in the Merrion Centre have gone into administration – Walmsley’s Furniture and musical instruments specialist Scheerers Music.
“It was really sad to see Scheerers go,” said Town Centre’s chairman and chief executive Edward Ziff.
“It was an old established family business.”
The adjoining Walmsley’s and Scheerers sites will be merged to create a bigger shopping unit for a new retailer.
“It’s an opportunity for us, but we’re very sad to see they’ve gone,” added Mr Ziff.
The group said that for the year as a whole, the outlook is unchanged.
“Our focus on value for money retailing in four of the top five cities in the UK outside London has enabled us to maintain high occupancy levels and generate strong income for shareholders,” said Mr Ziff.
“Our asset management skills are our greatest strength and we remain competitive, working with our tenants, which assists them in achieving their objectives.
“Whilst we have made two acquisitions so far this year our priority is to focus on the opportunities in our existing portfolio, particularly at the Merrion Centre,” he added.