18th Mar 2005 12:07
Liberty International PLC18 March 2005 18 March 2005 LIBERTY INTERNATIONAL PLC ANNUAL GENERAL MEETING TRADING STATEMENT The following is the text of a statement made by Liberty International attoday's Annual General Meeting. Enquiries:Susan Folger Company Secretary Tel: 020 7887 7000 This announcement includes statements that are forward-looking in nature.Forward-looking statements involve known and unknown risks, uncertainties andother factors which may cause the actual results, performance or achievements ofLiberty International PLC to be materially different from any future results,performance or achievements expressed or implied by such forward-lookingstatements. Any information contained in this announcement on the price atwhich shares or other securities in Liberty International PLC have been boughtor sold in the past, or on the yield on such shares or other securities, shouldnot be relied upon as a guide to future performance. "General Liberty International's preliminary results were released some five weeks ago on9 February 2005. The most important corporate event since that date has been the major UKregional shopping centre transaction with Prudential Assurance Company Limited("Prudential") which was announced three days ago on 15 March 2005. Transaction with Prudential For an aggregate consideration of £653 million, the Liberty International grouphas acquired a 50 per cent interest in Prudential's holdings in two of the UK'sleading regional shopping centres, The Mall at Cribbs Causeway, Bristol, and theManchester Arndale, together with associated properties. Cribbs Causeway represents one of the limited number of regional out-of-townshopping centres in the UK while Manchester Arndale will, on completion of theNorthern Extension development in 2006, rank as the UK's largest city centreshopping centre. The transaction substantially enhances Liberty International's market positionin the UK shopping centre industry, where our holdings now include nine of thecountry's top twenty five shopping centres. Furthermore, we believe theassociation with Prudential should provide long-term strategic benefits toLiberty International. Capital Shopping Centres Retailer demand for space at our completed shopping centres remains at stronglevels with the overall level of void units still a negligible percentage oftotal units. Our rent review programme is continuing to produce settlements inline with expectations, importantly at Braehead, Renfrew, near Glasgow, wherethe first round of reviews since the centre opened in 1999 is now well underway. At this early stage of the year, it is premature to draw conclusions onretailers' trading performance but footfall levels and turnover figures indicatethat our centres are maintaining their overall attractiveness to the UK public. The group's aggregate development programme remains unchanged from the £1.3billion reported at the year end of which £1.15 billion related to CapitalShopping Centres. Our next major development project to be opened is Chapelfield, Norwich, a new510,000 sq.ft. centre, scheduled for Autumn 2005. Letting progress hascontinued from the position reported at the year end, when 89 per cent of thespace and 82 per cent of anticipated rents were either committed or under offer. In respect of the £850 million potential but as yet uncommitted long-termshopping centre development programme, progress continues to be made on thejoint venture projects at Cardiff and Oxford and on the major extensions toexisting centres, Eldon Square, Newcastle, and The Harlequin, Watford. In the case of Cardiff, a detailed planning application for the St David's 2development was submitted on 4 March and construction is now scheduled tocommence in Spring 2006 for completion and opening in 2009. At Eldon Square, Newcastle, the Transport Minister announced on 28 February thelong-awaited £11 million of Government funding for the new bus station whichforms an integral part of one of the three extension schemes planned for thecentre. Construction on all three elements is due to start over the nexteighteen months. Capital & Counties Investment sentiment remains strong in Central London and provincial retailsectors. Other than two shop units at Swansea market, we have no UK retailvacancies. We are in discussion with the Administrator of Allders in respect oftheir lease of the major store at The Headrow, Leeds. Office tenant interest in the West End of London continues to improve and ourongoing refurbishment programme has enabled us to achieve satisfactory lettings. A planning application was submitted in February for the 380,000 sq. ft.refurbishment and redevelopment of the King's Reach complex on London's SouthBank. Financing At 31 December 2004, the group had cash balances of £438 million and committedfacilities of £675 million representing over £1.1 billion of available financialresources. We have already reported the successful £600 million refinancingthis year of MetroCentre, Gateshead, through the commercial mortgage-backedsecurities market (the CMBS market) at significantly reduced interest ratemargins. In order to provide suitable long-term financing for the Prudential transactionand the group's development commitments, we are now embarked on arranging interalia finance linked to the Braehead shopping centre, which has no attached debtfollowing the MetroCentre refinancing. As reported at the year end, substantially all interest payments over the nextfive years are at fixed rates with a gradually reducing proportion of fixedrates beyond that date. Real Estate Investment Trusts ('REITS') We note the UK Government's re-affirmed commitment to introducing tax-transparent property vehicles (UK-REITS) in line with other developed economiesaround the world. We are reviewing the further Discussion Paper on UK-REITSreleased in the UK Budget on 16 March 2005 and intend to make submissions to theUK Treasury in due course. Stamp duty land tax We have commented before on the penal and counter-productive 4 per cent stampduty land tax levy on UK commercial property transactions. To some extent thisburden on the property industry had been alleviated in the last two years byso-called disadvantaged area relief, which participants in the market place hadbeen led to believe would not be reviewed until the end of 2006. However, quite unexpectedly, the Budget on 16 March 2005 removed disadvantagedarea relief for non-residential transactions, thereby re-imposing the fullburden on commercial transactions. Notional acquisition costs, primarily stamp duty land tax, amounting to £170million, equivalent to 48 pence per Liberty International share, were deductedby our valuers in arriving at the valuations of completed investment propertiesat 31 December 2004 and our net asset value per share of 1017 pence as at thatdate. Following the Budget change referred to above, this deduction would be increasedby £92 million, equivalent to a further 26 pence per Liberty Internationalshare. We would, however, point out that investment properties are by definition assetsnot earmarked for disposal whereas the notional costs deducted from their valuesassume they are sold individually on the open market, taking no account of thestructures through which they are held. Furthermore, in the case of a goingconcern and listed company such as Liberty International, the purchase and saleof shares is the predominant mode of exchange of value for shareholders,incurring stamp duty at 0.5 per cent, rather than the sale of each underlyingproperty. If these notional acquisition costs were added back to reflect a more realisticposition for shareholders, Liberty International's net assets per share at 31December 2004 would have amounted to 1065 pence. Shareholders should note that the Budget change removing disadvantaged arearelief from stamp duty for commercial transactions referred to above should haveonly a very limited impact on Liberty International's profitability and dividendgrowth potential. We do however believe the change adds greater urgency to the need for the RICSto review their Appraisal and Valuation Standards in order to provide theflexibility to give proper recognition to the structures through which assetsare held and ensure the balance sheet properly reflects the true value of theunderlying assets. Concluding Remarks Finally, following the Prudential transaction, our UK shopping centre interestsheld through Capital Shopping Centres are now around £5 billion and totalproperty assets amount to £6 billion. Including the Serramonte centre in SanFrancisco, we have twelve completed regional shopping centres with a furtherthree UK projects in Norwich, Cardiff and Oxford at the development stage.Retail property represents over 93 per cent of our total assets and includessome £180 million of UK retail parks. With an encouraging start to the year, the directors continue to believe thecompany has exceptional long term prospects." ENDS This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
INTU.L