Town Centre aiming to reap the rewards from Leeds Arena

Town Centre Securities (TCS) is refurbishing the Merrion Centre in Leeds to attract visitors travelling to and from the 13,500-seat concert venue, which is opposite the centre.

TCS is hoping to create a £12m leisure development of bars, restaurants and a gym to replace the former Merrion Market and boost evening trade. It is also planning to refurbish the centre car park, which it said could become the main car park for the arena.

A detailed planning application has been lodged and, subject to approval, TCS expects to be on site in the first half of 2012 with completion to coincide with the arena opening in spring 2013.

The Leeds-based company said it would shortly complete the refurbishment of the retail units and offices on Merrion Street, where it has pre lets to KFC, Coral and Q Park.

Announcing its financial results for the year ended June 30, the company said underlying pre-tax profit rose to £8.2m compared to £7.6m the previous year, while revenues dipped slightly from £22.95m to £22.48m.

Statutory profit after tax in the year ended June 30, amounted to £15.3m, less than half the £39.6m made the year before. The company said that this included a valuation surplus of £6.7m reflecting the returns on investing in and managing the portfolio in what had otherwise been a flat market.

Last year’s result included a valuation surplus of £25.4m and a £9m profit on the debenture buy-back. Overall occupancy levels rose from 93.2 per cent to 96.9 per cent, and the Merrion Centre’s income grew for the sixth consecutive year. There was a significant improvement at TSC’s Urban Exchange in Manchester following lettings to Go Outdoors, M&S and Pure Gym.

Disposal of assets, including a small property in Bradford, raised proceeds of £6.5m. Speaking to the Yorkshire Post, Edward Ziff, chairman and chief executive, said he was “satisfied” rather than pleased with the firm’s annual results. “We have worked hard to keep the business in good shape. The outcome is as good as we could have expected in this economic environment,” he said.

Three of its tenants went into administration during the 12 months, fewer than the previous year. But Mr Ziff warned the first quarter of 2012 could lead to the demise of a significant number of retailers and said he was concerned about when the retail industry would see a revival.

“My sense is that the banks are prepared to finance retailers through to Christmas but I fear whether they will continue to support them going forward,” he said. “Over 90 per cent of our tenants still pay their rents quarterly so the first quarter of 2012 could be very significant.”

He added: “Retail is really tough at the moment but people can only cut costs so far. We have taken out of our overheads but you get to the point where you can’t take any more out. There comes a time when you need business to get better.”

However, Mr Ziff said Leeds was faring better than some other cities. “Leeds is doing better because you don’t see an overdevelopment of retail, like other cities, during the good times so during the bad times, when we have had vacancies, we have been able to fill them.”

Car parking revenues of £4.8m were similar to the previous year. The firm benefitted from additional contracts with Yorkshire Water and GE Capital at Clarence Dock multi-storey car park in Leeds and Mr Ziff added that since taking over the operation of the Merrion Centre multi-storey car park, TCS has increased daily parking by eight per cent, leading to improved footfall in the shopping centre, particularly at weekends.

Underlying earnings per share were 15.1p in the 12 months with basic earnings per share at 28.8p. Borrowings were cut from £141.3m to £140.2m.

Mr Ziff said: “We remain cautious about the economy...and are wary of the potential for tenant failures and pressure on rental levels. Our investment in Urban Exchange in Manchester demonstrates our ability to successfully redevelop and manage major retail assets and to attract major tenants.

“We firmly believe that projects at Merrion Centre in particular and across our remaining portfolio will in due course enhance our asset value and income generation, ultimately improving our returns and thereby enhancing shareholder value.”

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