Town Centre thrives despite Brexit uncertainty

Merrion House
Merrion House
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Property developer Town Centre Securities has reported improved trading despite the negative combination of “Brexit uncertainty and continued seismic change in retailing”.

The Leeds-based firm said these two factors make it a tougher environment in which to operate, but its expertise has resulted in improved income from properties vacated due to CVAs and insolvencies.

Edward Ziff, chairman and chief executive, said: “We continue to improve our portfolio and maintain our track record of managing the business for long-term success, notwithstanding that the combination of Brexit uncertainty and continued seismic change in retailing makes it a tougher environment in which to operate.”

In a trading update for the six months to December 31, the firm reported good progress in the repositioning of its portfolio. It has reduced the proportion of retail and leisure assets to 52 per cent, down from 70 per cent in 2016.

Its overall occupancy level increased to 96 per cent from 95 per cent in the first half.

Like-for-like passing rent rose 0.9 per cent versus a year ago, supported by the updated Merrion House lease to Leeds City Council.

It said rent collection remains strong with 99 per cent of rents collected within a week of the quarter commencing.

Mr Ziff said: “Our expertise in active asset and tenant management has resulted in TCS improving future income levels from properties vacated due to CVAs and insolvencies.

“While we reduce the overall proportion of retail in our portfolio, the resulting greater focus on supermarket and convenience retailing is helping de-risk the company from the worst of the high street disruption.”

New research indicates that another 175,000 jobs are set to be lost from the high street this year, while the value of retail property will tumble.

Over 23,000 shops are expected to close in 2019, according to research by real estate adviser Altus Group.

The value of retail property is expected to decline by 16 per cent as shoppers are tempted away from the high street by online alternatives.

A number of major retailers including Maplin, Toys R Us and House of Fraser went into administration last year. Many other shopping chains slashed their store estates in response to reduced footfall on the high street. Retailers planning to close stores this year include Marks & Spencer, Debenhams and House of Fraser.

TCS said that while it has seen some disruption from administrations and CVAs, its experience will result in rents rising due to a better mix of replacement tenants.

“We have seen eight CVAs or insolvencies from tenants in the last 12 months including Poundworld and Mothercare, representing 2.5 per cent of the total rent roll,” the firm said.

“By December 2018, six of the eight units had been re-let with rent ahead of previous levels with new tenants including Iceland and The Works. The two most recently vacated units are being actively marketed, accounting for just 0.5 per cent of the total rent roll.”