29th Aug 2014 12:06
LONDON (Alliance News) - London and Associated Properties PLC Friday said it swung to a loss in the first half, as it attempted to finalise financing for the years ahead.
The retail property investor posted a pretax loss GBP2.2 million for the six months ended June 30, compared with a profit of GBP10.2 million a year earlier. Gross property income dipped to GBP3.7 million from GBP3.8 million.
London and Associated Properties said its results were affected by two exceptional factors. First, the company incurred significant expenses in re-financing its Royal Bank of Scotland Group PLC debt facilities. In addition, the company spent GBP25.3 million on the termination of long-dated swaps which it had used to hedge its loans from RBS and Lloyds Banking Group PLC.
The company said it had provided for this anticipated cost in its 2013 accounts, based on the mark-to-market value quoted by the banks at that date.
"The reduction in the reference interest rates post the year-end meant that the provision we had made was lower than the mark-to-market settlement at the time the swaps were actually terminated," London and Associated Properties said.
Consequently a further GBP1.1 million has been charged against income in the first half of 2014.
Post the year-end, the company completed a new GBP45 million financing provided by Santander Group and Europe Capital Mezzanine Ltd, replacing the short-term RBS facilities.
At an operating level the company said it now owns GBP87.5 million of retail property directly. However, it manages and has a financial interest in some GBP240 million worth of property, including joint ventures.
At Orchard Square, Sheffield, the company agreed terms with retailer River Island at GBP495,000 a year on a new 10-year lease with a break clause at the fifth year.
The company said its two markets in Brixton, south London continue to go from "strength to strength". It said income growth at the site is being driven by extending waiting lists, which now comprises over 200 traders.
"The local authority has commenced consultation on a new framework for enhancing Brixton as a town centre, and, as our markets are considered to be the principal focal point, we would consider investing to expand them," the group said.
Looking ahead, the company said it is now on secure footing with both long-term financing in place and a very strong income base.
"We have a new and positive banking relationship and trading conditions are improving. We therefore look to the future with confidence," Chairman Michael Heller said in a statement.
London and Associated Properties shares were quoted down 0.3% at 47.34 pence Friday afternoon.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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