Merrion has the answers to defying downturn

The Leeds shopping centre saw a one per cent increase in footfall in the six months to December 31, with footfall rising 7.6 per cent during December. The centre is attracting 10 million visitors a year and Town Centre’s chairman and chief executive Edward Ziff said a number of retailers are trading “very well”.

“Morrisons, Superdrug, Boots and Brighthouse are trading really well at Merrion and a Poundworld will be opening in the centre at Easter,” he said.

“We’re in a very, very difficult marketplace but at 97 per cent let we are doing a pretty good job. We’re working flat out to keep the portfolio as income producing as possible.”

Mr Ziff ascribed much of Merrion’s success to its latest marketing initiatives.

“We’re working very hard at marketing the centre,” he said. “During half term we have face painters, clowns and ahead of Valentine’s Day we gave out chocolates.

“To succeed shopping centres need to be cheaper, better or different. Better is subjective, but different is what we are trying to be.”

Other marketing initiatives have included a promotion to win iPads, free Santa’s grotto and a big back to school and university push.

Mr Ziff said the centre is preparing for Easter with chocolate and flowers promotions and it is gearing up for the Euro 2012 football championship and the Olympics this summer. He said that Town Centre is weathering the current economic conditions well despite 2011 being a difficult period for retailers.

“Our focus on value for money retailing means that our properties, in particular The Merrion Centre, are fulfilling a consumer need and consequently our underlying profitability has remained strong.

“As a reflection of this and as a result of continued investment in our portfolio, our investment property valuation in the first six months of our financial year has remained stable.

“We are very optimistic about the future for the Merrion Centre even in these challenging times.”

The group has drawn up proposals to redevelop the Merrion Way frontage and the Merrion multi-storey car park.

The scheme will include 50,000 sq ft of new leisure units together with the refurbishment and improvement of the 1,000 space car park.

Town Centre’s property director Richard Lewis said the group will create a ‘state-of-the-art’ car park that can cater for the Arena development when it comes on stream.

“We will introduce wider width of bays, new equipment to allow payment by credit card or mobile phone, bay monitoring which shows a green light where there is a space, more disabled spaces and an electric car point,” he said.

Town Centre reported underlying pre-tax profits of £4m for the six months to December 31, down from £4.4m the previous year.

The group’s finance director Chris Kelly said the shortfall included a £100,000 decrease in car park revenues due to increased competition and slightly higher average borrowing costs.

A £90,000 reduction in rents followed the sale of a property in Derby and a small reduction in rents elsewhere.

Statutory profit after tax fell from £7.8m to £1.8m, but Mr Kelly said this was due to a revaluation deficit of £2.2m against a 2010 surplus of £3.2m. “It’s due to changes in the value of the properties,” he said. “Because of the cycle we’re in the value sometimes goes up and sometimes goes down.”

Mr Ziff said that occupancy levels have risen.

“We want to sweat the assets as best we can. At the Merrion Centre we’re up three per cent year on year. We’re beating the national benchmark,” he said.

The group completed the refurbishment of the Merrion Street retail units during the period. They are now let to fast food chain KFC and bookmakers Coral.

Across the retail assets, which include Urban Exchange in Manchester, six stores went into administration and a further four have gone into administration since the start of 2012.

The majority of these tenants continue to trade. Mr Ziff said the Barratts shoe store is trying to negotiate a new lease. Other stores that went into administration include Peacocks and Bonmarche.

Across the group, Town Centre said that rental collections were “exceptionally strong” with over 98 per cent of rentals collected within five days of the due date in both the September and December quarters. The group has completed its refinancing of £90m of revolving credit facilities.

“Along with our long term debenture of £106m this provides the business with secure funding for the foreseeable future,” said Mr Ziff.

“It demonstrates confidence by RBS and Lloyds with whom we have renewed facilities and Handlesbanken who join our banking group.”

Town Centre said it would maintain its interim dividend at 3.1p.

The group had gross borrowings of £142.5m at the end of last year, down from £144.6m in 2010 and gearing fell from 98 per cent to 94 per cent.

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