Property firm recovers from Covid and outlines plans for Leeds developments

The Leeds based firm, which owns the Merrion Centre, said its results for the year to June 30 were disappointing, but the impact of Covid-19 has been unprecedented and a high degree of uncertainty remains.

The group reported a strong performance in the first two thirds of its financial year, with good numbers and progress made on its strategic initiatives.

However, from March to June, the lockdown resulted in a £3.6m Covid-19 hit, including £2m in lost car parking income, a £1.2m impact in the property business, primarily due to bad debt, and a £400,000 hit from reduced bookings for its ibis Styles hotel.

TCS said its retail and leisure tenants were hardest hit. These assets have seen valuations drop by 12 per cent year on year, accounting for £23m of a total £26m fall in valuation.

The firm reported a statutory loss for the year of £24.2m, down £11.7m year on year, largely due to the negative impact the crisis has had on the value of its portfolio, which is down 7 per cent year on year.

Planning consent for Whitehall Road in Leeds to develop a 180,000 sq ft Grade A office space and 513 space multi-storey car park has been implemented and TCS is currently marketing the site in a bid to secure a pre-let.

Retail and leisure now account for 47 per cent of the firm’s portfolio, down from 50 per cent a year ago and 70 per cent in 2016. This level reduces to 42 per cent following the sales announced earlier this week, TCS has sold four retail properties in Scotland and London for a total sum of £35.2m. The units include two Waitrose stores, an Aldi/Home Bargains store and a high street retail store in London.

TCS said the refurbishment of 123 Albion Street, Leeds (previously The Cube), continued during lockdown and has now completed, further reducing exposure to retail and leisure. The £4m office investment is expected to deliver an ongoing post investment yield of over 8.5 per cent and TCS said interest in the space is strong.

Chairman and chief executive, Edward Ziff, said: “We’ve got two (potential) occupiers for 123 Albion Street. Both are in discussions with us about possibly taking the whole building.”

He said that residential is going to become a bigger part of the group’s portfolio.

“Retail will always be a meaningful part of our portfolio as long as we own Merrion Centre, somewhere between 33 and 40 per cent is where that number is going to settle in the short to medium term.

“We want to move away from retail. There is still a shortage of homes in this country, whether that be city centre residential, edge of city or suburban residential, I think that should be the most sustainable, predictable source of long term income.

“Residential is just 6 per cent at the moment. I can see that going to 20 per cent quite quickly. From before Covid, during Covid and now, that part of our estate has been virtually fully let throughout.”

Since the end of the lockdown, the car parking business has seen good trading.

“Since we’ve seen a return to some sort of normality, the pick up in demand for our car parking has been really strong,” said Mr Ziff.

“The two parts that will pick up the loss from retail will be residential and car parking.”

Mr Ziff said the firm was very disappointed to break its 60-year track record of delivering a maintained or increased dividend, although it was pleased to be able to keep its commitment to pay the interim dividend.

“However, the unpredictable nature of the Covid-19 crisis has made the decision to reduce the full year dividend payment the right one for the business,” he added.

“Looking forward, the board is using this moment to reset and reinvigorate the business. We have determined that the overall strategy remains appropriate, but requires acceleration particularly with regards to the disposal programme, as evidenced by the significant sales completed recently.

“This will affect future earnings and dividend levels, however we believe longer term we shall emerge as a stronger business and look to the future with confidence.”