Town Centre focus on North will '˜cushion' Brexit impact

The Leeds-based firm said ​there is no doubt that the market increases in value ​it has seen ​over​ the last couple of years have come to an end, but ​its​ portfolio has not seen the same Brexit effects that have been seen in central London​.

The group’s chairman and chief executive Edward Ziff said: “We are in a phoney war. There has been eight to 10 weeks of summer when people are not looking.

“When Article 50 is triggered it will concentrate everyone’s mind.”

He said that despite the Brexit impact on property value, Town Centre’s focus on the North will cushion the blow.

“It’s different for us from what we’ve seen in the South East. Leeds, Manchester, Glasgow and Edinburgh gave hardly enjoyed the property boom the South has seen. Property values are at a very sustainable level in the areas we are in whether we are in the EU or not.

“In the North it will be business as usual, but there may be a cold snap.”

He added that retailers could start to feel the impact of sterling’s decline against the dollar.

“75 per cent of our portfolio is retail. We need to see how the pound recovers against the dollar,” said Mr Ziff.

“That’s where retailers might start to feel the effect. However at the depths of the recession our occupancy rates were at 95 per cent.”

He was speaking as the group announced a small rise in underlying profits for the year to June 30. The ​group’s ​European Public Real Estate Association (EPRA) accounting standard pre-tax profit rose 1.5​ per cent​ to £6.6m​. ​Statutory profit for the year halved to £11.9m, which includes a property revaluation surplus which fell 76 per cent to £3.5m.

Analysts at Liberum said in a note: “2016 results are just ahead of forecast with the dividend increased for the first time since 2010.

“Full year results show the continued benefit of Town Centre Securities’ regional asset management expertise and the opportunity from its significant development pipeline.”

They added that the firm offers exposure to regional property, where recovery has lagged London and income yields are higher.

“A conservative management team, with significant ownership aligned with shareholder interest and focused on cash return, provides added attraction,” they said.

The group raised its dividend by 5.4 per cent to 11p thanks to a build up of earnings.

“It’s been a long wait for shareholders, but we like to think earnings will continue to grow,” said Mr Ziff.

“While the market absorbs the unfolding story of our exit from the European Union we will carry on doing what we have always done. We have an exciting development programme.”

The firm is undertaking its largest development programme in almost 50 years.

Earlier this year it began work on a number of large development projects, including a 136 bedroom Premier Inn Hotel at Whitehall Riverside in Leeds.

It is also refurbishing Merrion House offices at the Merrion Centre in Leeds, where it is also developing a new 134 bedroom Ibis Styles hotel and Marco Pierre White restaurant which is scheduled for completion in the first half of 2017.

The Merrion Centre, the group’s single largest asset, saw a 9.4​ per cent​ increase in footfall to 812,766 shoppers in July. The shopping centre is also soon to welcome a sizeable Heron Frozen Foods within the main mall as the chain expands further into Leeds from its Hull base.

“Since the development of the Merrion Centre in the 1960s, Town Centre Securities has been a market leader in creative and sustainable property development​,” said Mr Ziff.

​“This extensive development programme, the biggest that Town Centre Securities has had ongoing in recent times, continues this trend and we are delighted with our outlook in the context of the Brexit landscape.”