Yorkshire developer eyes up future expansion

The Leeds-based firm announced a 27 per cent rise in half year pre-tax profits to £12.4m. Its total portfolio value increased by 2.4 per cent in the six months to December 31.

Edward Ziff, chairman and chief executive, said: "We are delighted with the Merrion Centre. Retail-wise it's trading strongly. We've seen good demand and occupancy is high.

"Retail is hard at the moment, but we've managed the space to create extra rental income. Merrion Centre is an exceptionally strong destination. It's volume and convenience retail, not fashion."

Fashion retailers have been hard hit by the consumer downturn whereas value retail is still seeing strong growth as people look for bargains and eschew big ticket items such as furniture.

The Merrion Centre saw growth in rental income following the creation of extra space.

Analyst Kieran Lee at Liberum said: "Town Centre Securities' first half results were ahead of our expectation and provide promise in the future value creation its significant development schemes can offer.

"While disposals weighed on earnings this was also still ahead of forecast and the dividend was held flat.

"A large development pipeline across Leeds and Manchester provides scope for significant future income and capital growth."

Mr Lee said that while disposals weighed on overall profits, the recently completed ibis Styles hotel development in Leeds further enhanced income, with occupancy over 70 per cent and room rates materially ahead of budget.

He added that the car park business, CitiPark, also continued to generate good operating income growth of 5.2 per cent and continues to provide a good source of income utilising land in Leeds and Manchester ahead of development.

Dr Ziff said the group is keen to develop Whitehall Road by the side of the station.

"I think we'll bring forward plans for a 500 space multi-storey car park, for which we already have consent. It will probably take another 12 months to get on site," he said.

"We are very confident there will be good demand for parking."

There are also plans to develop office space above a former cinema at the Merrion Centre.

Town Centre Securities has been chosen by Leeds City Council to develop a major new scheme in George Street, opposite Hammerson's new Victoria Gate shopping centre, including 126 aparthotel units and nine ground floor retail units with work expected to commence in the first quarter of 2019 in a 50/50 joint venture with the council.

The group said the Merrion House development was completed a month ago, on time and on budget, completing a £70m ten-year Merrion Centre development and improvement programme.

"Merrion House is finished and that's going well," said Dr Ziff.

"Leeds City Council opened for business there this morning."

Speaking about Leeds' strengths and weaknesses, Dr Ziff said: "Leeds is an incredibly strong city, but the not so good stuff is there is a lot of empty retail in prime locations.

"Trinity Leeds and Victoria Gate have created some black holes."