City sees ripple effect of property growth

Town Centre said Merrion, which celebrates its 50th anniversary this year, was its strongest performing property with a 16 per cent rise in capital value and growth of over £1m a year in rent following a further £6.5m investment in the centre, bringing the total to £9.4m.

The group also confirmed plans to invest £5m in the adjacent hotel, which closed last year.

Town Centre’s chairman and chief executive Edward Ziff said the centre has benefited from its close proximity to the new Leeds Arena.

“The arena has built upon an excellent first year hosting a diverse range of international concerts from artists including Prince, Bruce Springsteen, Andrea Bocelli, Rod Stewart and Elton John, family shows such as Cirque du Soleil, Strictly Come Dancing and Ant and Dec, to sports events including BBC’s Sports Personality of the Year and the launch of the Grand Depart to the Tour de France,” said Mr Ziff.

He said the group is seeing good returns on its refurbishment and investment programme with the Arena Quarter retail, leisure and car park project (the New Front) opposite the new First Direct Arena nearing completion.

A further four units have been leased and as a result, 76 per cent of the rental income is now secured on an average unexpired term of 13.6 years, giving the group security for the future.

Town Centre’s property director Richard Lewis said: “We have to invest in Merrion now. It has lasted 50 years. We need it to last another 50 years.

“Leeds is standing up very well. We are seeing a lot of polarisation in retail and leisure to major centres such as Leeds and Manchester while smaller cities and towns are suffering.”

Mr Ziff said: “During the difficult times we coped with the downturn very well.

“We’re due a good time. While things aren’t as good as in the South East, things are improving, particularly in Leeds and Manchester.”

Merrion has signed a significant lease renewal with Morrisons that will add another 20 per cent to the store size and £500,000 to rental income.

Mr Ziff said the extension involved the relocation of Peacocks and 3 Store, improving the overall retail offering.

A £7.6m refurbishment of the multi-storey Merrion car park started in February and is scheduled to complete in December.

The refurbishment plans include structural repairs, new lifts and staircase, wider parking bays, improved signage and bay markings, LED lighting, improved security and ticketing systems as well as a new facade with feature lighting.

The revamp of the car park will also include contactless payment pay stations, customer only pedestrian access gates and electric car charging bays and more disabled spaces.

“Merrion car park will be state-of-the-art,” said Mr Ziff. “We’re very pleased with it.

“We hope to roll out variations on the theme at other car parks. We hope to use what we’ve learned at Merrion.”

Town Centre said underlying pre-tax profits rose four per cent to £7.6m in the year to June 30, ahead of expectations.

The group reported a statutory profit for the year of £27.4m, up from £3.6m, which reflects a property revaluation surplus of £19.8m.

The group’s shares rose six per cent to close up 13.25p at 243.25p.

The board is recommending a final dividend of 7.34p per share, which, together with the interim dividend of 3.1p, provides an unchanged total dividend of 10.44p.

Analyst John Cahill, at Oriel Securities, said: “With the shares offering a dividend yield of 4.5 per cent and trading at a 25 per cent discount to the end-June NAV, we see excellent value, and retain our ADD rating.”