Property firm half-year loss as asset values decline

Town Centre Securities has booked a reduced half-year loss of £9.7m, compared to last year’s H1 loss of £19.1m, as a result of 4.4% like-for-like decline in its portfolio value .

Net assets declined in value from £141m to £124m. The firm says underlying revenues remain resilient – EPRA earnings of £3.8m include a tax credit of £1.7m; last year’s H1 earnings were £1.7m – and it plans to match last year’s interim dividend of 2.5p per share.

Its debt reduction strategy and refocusing of the business is now complete, chairman and chief executive Edward Ziff said, and the firm will now seek to bring forward its development pipeline.

Ziff said, “We have benefitted from the last three years’ disposal and asset management programmes and reduction in borrowings, which positioned us well to contend with the ongoing macro-economic challenges in the six month period ending 31 December 2023. During the first half we were able to use our strengthened financial position to launch and complete a successful NAV per share accretive tender offer.”

“Our property rental business, car park and hotel operations continue to deliver resilient underlying revenues and earnings against challenging macro-economic conditions. These conditions have led to movements in the underlying yields and a further valuation reduction of our property portfolio, in particular with our office investments. Expectations are that inflation may fall to the Government’s target of 2 percent by the end of Q2 2024, and that the Bank of England may then start lowering interest rates, which may lead to an improvement in liquidity in the property investment markets and result in valuations stabilising. However, with continued low levels of variable interest rate bank debt, I am confident that we are in a strong position in these uncertain times.”

“Rising costs, interest rate increases and the ongoing geopolitical conflicts are affecting all stakeholders and we remain committed to supporting them, in particular our dedicated employees. We continue to focus on maintaining good landlord-tenant relationships, with open dialogue and collaboration the cornerstones of our approach.”

“Our attention is now focussing on investing in our development programme over the coming years. However we remain cautious and ever mindful that taking advantage of potentially accretive opportunities needs to be balanced against retaining robust finances.”

“Overall, the business has now been reset, with a more diverse portfolio of assets, lower levels of gearing and more importantly historically low levels of variable rate borrowings – and is now looking predominantly at bringing forward our development pipeline.”