TOWN Centre Securities reported a strong pick-up in the regional property market as investors look for better returns outside the over-heated London market.
The Leeds-based firm said underlying pre-tax profits rose five per cent to £4.0m in the six months to December 31.
Chairman and chief executive Edward Ziff said: “There has been a definite pick-up in the regional property market. The money was in the M25, but now foreign buyers have moved in so the institutional market is looking at Leeds, Manchester, Edinburgh and Glasgow.
“Our policy of investing in these four places has held us in good stead. We’re beginning to see values recognised again.”
Town Centre is now looking at other cities including Sheffield, Birmingham, Bristol and Nottingham.
Talking about the Yorkshire market, he said that Leeds and Sheffield look the strongest.
“We wouldn’t look at Hull or around there. Harrogate is lovely, but it’s priced accordingly and the problem with York is that it has a lot of tourists, but not regular shoppers.”
In the half year to December 31, the overall occupancy level was maintained at 98 per cent and the group completed over 60 letting transactions during the period.
At the Merrion Centre, the company said that new retail and leisure units are progressing well with over 70 per cent let or exchanged.
It has nearly completed the nine retail and leisure units on Merrion Way. It said that Pure Gym and Costa are open and trading well, and Cosmo will shortly start its fit out and hopes to be open in the autumn.
Leases have been exchanged on two further units.
Work is to start on the refurbishment of the Merrion Centre multi-storey car park to create a modern, state-of-the-art facility due for completion in time for Christmas trading 2014.
Following the exchange of contracts with Leeds City Council in September for the refurbishment and extension of Merrion House, Town Centre will submit a detailed planning application shortly.
At Whitehall Riverside, Leeds, the group has put in planning application for another large building on the site.
It has planning consent for a 128-bedroom hotel on the site and outline planning consent for a 600,000 sq ft mixed use development, including three eight-storey office buildings and a 500-space multi-storey car park.
“At a time when there is little or no available large floor plate, Grade A facilities in Leeds, we are actively seeking tenant interest,” said Mr Ziff.
Town Centre reported a four per cent increase in the value of its investment portfolio and a six per cent increase in net assets during the first half, giving an increase in net assets to 283p per share.
Rent collections stayed strong with over 99 per cent collected within five days of the quarter date.
The group said it is making progress with the sale of its site at Apperley Bridge, Bradford and it now has planning permission for a residential scheme for 100 units.
It has put the demolishment of the current buildings out to tender.
Car park revenues over the half year were in line with the same period last year at £2.5m with underlying profitability of £1.3m, up from £1.2m.
“We have benefited from our investment in new parking management equipment in Leeds and from our increasing use of social media,” said Mr Ziff.
Analyst John Cahill, at Oriel Securities, said: “We believe valuers are now reflecting improving condition in regional property markets, in particular the cities in which Town Centre holds assets, and this is reflected in the positive tone of the management outlook statement.
“The company is well-placed to benefit from this improvement, with excellent asset management capacity, and a development programme that will deliver into improving letting markets.
“Occupancy remains exceptionally high at 98 per cent, and rent collection is strong, with 99 per cent collected within five days of the quarter date, which demonstrates the good health of the underlying tenant base, and management’s ability to maintain a high quality portfolio.”
Mr Ziff said that Town Centre will be represented at the international property show MIPIM in Cannes next month. Asked how the region should sell itself, Mr Ziff said the area is lucky to have so many top-flight universities.