Town Centre Securities wary over retail climate but keeps voids low

The Leeds-based owner of the Merrion Centre in Leeds said its performance since July 1 has been consistent with the same period last year and in line with its plans.

Chairman Edward Ziff said: “We continue to maintain a very strong focus on managing our assets effectively and this is reflected in our void rate remaining close to three per cent.

“We are pleased with progress so far at Urban Exchange where our tenants are trading satisfactorily. There is, however, uncertainty for the retail sector at present and we remain cautious about the future as a result.”

The company has net debt of £142.8m, comprising £106m of 5.375 per cent debenture stock repayable in 2031, and £36.8m of bank loans. It said this is consistent with its expectations.

“There is significant headroom in our facilities and we continue to operate comfortably within our loan to value and interest cover covenants,” said the development group. TCS is in talks to refinance its bank facilities and said this will mean higher borrowing costs.

The group has been working with tenants at Urban Exchange in Manchester and hopes to develop a brand for the outlet centre.

“We believe there is an opportunity to market the centre to the benefit of landlord and tenants,” it said. Only one unit, 7,000 square feet out of 140,000 sq ft, remains unoccupied.

As a result it has maintained its void level at around three per cent, following lettings at Urban Exchange and other asset management.

TCS recently refurbished shops at Merrion Street in its Merrion Centre, handing new shops over to KFC and Coral.

The group is refurbishing its multi-storey car park and creating extra retail/leisure units at ground floor level in anticipation of Leeds Arena, a 13,500 capacity concert site which will be built next door.

“We expect to receive planning and hope to be on site in the early part of 2012,” it said.