17th Aug 2009 07:00
SHAFTESBURY PLC
Interim Management Statement
For the period 1 April 2009 to 31 July 2009
London's West End remains buoyant, with record numbers of overseas and domestic tourists. As a result, we continue to experience healthy demand for retail, restaurant and residential accommodation across our villages. We are continuing to meet or exceed our letting targets for these uses.
Demand for offices continues to fall and consequently rental values remain under pressure. When offices become vacant we always explore the potential for alternative uses.
Analysis of wholly owned vacant commercial space as at 31 July 2009
|
Estimated Rental Value |
Shops £'000 |
Restaurants and Leisure £'000 |
Offices £'000 |
Total £'000 |
||||
|
31.7.09 |
31.3.09 |
31.7.09 |
31.3.09 |
31.7.09 |
31.3.09 |
31.7.09 |
31.3.09 |
|
|
Under refurbishment |
317 |
272 |
- |
200 |
604 |
468 |
921 |
940 |
|
Ready to let |
256 |
767 |
- |
- |
537 |
570 |
793 |
1,337 |
|
Under offer |
562 |
191 |
275 |
87 |
119 |
132 |
956 |
410 |
|
TOTAL |
1,135 |
1,230 |
275 |
287 |
1,260 |
1,170 |
2,670 |
2,687 |
|
Number of units |
21 |
27 |
2 |
2 |
33 |
38 |
- |
- |
|
Area - sq. ft. |
26,000 |
31,000 |
7,000 |
8,500 |
36,000 |
35,000 |
69,000 |
74,500 |
The total amount of vacant commercial space in our wholly owned portfolio remains very low. Excluding accommodation which is either undergoing refurbishment or under offer, the rental value of space vacant and ready to let was £0.8 million at 31 July 2009. We are actively seeking opportunities to secure vacant possession of restaurants and larger shops to satisfy demand from businesses which are keen to expand or open in our villages.
Construction of St Martin's Courtyard, the largest project in our joint venture with the Mercers' Company, is progressing well. Our share of the potential rental income of this project is approximately £5.2 million. The shops and restaurants are expected to be completed in phases and will be ready for tenants to fit out from February 2010. The 69,000 sq. ft of offices in four buildings and 37 apartments are also due to be completed in phases and will be ready for letting and occupation between February and September 2010.
Based on current enquiries and demand, we expect that most of the shops and restaurants, which account for approximately 60% of the scheme's projected income, will be let and ready to trade by the time the Courtyard is open to the public in the summer of 2010. We have recently completed the pre-letting of another large shop on Long Acre to a major international retailer.
At Wellington House, which is adjacent to the Courtyard, we have now commenced a phased refurbishment of 19,000 sq. ft. of offices, some of which have been let already. The cost of these works is approximately £1.7 million.
Acquisitions
Since 1 April 2009, we have purchased or contracted to buy properties at a total cost of approximately £20 million, including two restaurants and seven shops. We are investigating further acquisition opportunities across our villages.
Supply of investments in our locations remains limited as established owners are reluctant to sell assets which have proved to be good long-term investments. In spite of strong competition, our local market knowledge and substantial financial resources give us considerable advantages over other prospective purchasers.
Finance
The Rights Issue announced on 20 May 2009 was completed in early July. The capital raising has strengthened our equity base and has provided us with considerable additional headroom within our banking arrangements. In the short term, the net proceeds of approximately £149 million have been used to reduce bank borrowings, which are being redrawn to finance new investments.
At 31 July 2009, our bank borrowings stood at £360.3 million, with committed facilities totalling £575 million. We have long term interest rate hedging in place on £360 million of our bank debt, currently at a weighted average rate of 4.71%, so that the average all-in cost of our bank debt at 31 July 2009 was 5.58%.
Short term interest rates remain low, so that the all-in cost of bank debt we draw in excess of our hedging is currently below 1.5%. In contrast, long term interest rates are rising, which is reducing the non-cash mark-to-market valuation deficit of our long-dated interest rate hedging.
Prospects
London's West End, which has proved very resilient throughout the recent period of economic turbulence, continues to prosper and there is now evidence of stability returning to financial and property markets. We are confident that demand for our well located shops, restaurants and residential accommodation will remain strong. With the proceeds of our recent Rights Issue we now have substantial additional resources which will enable us to continue to exploit further investment opportunities across our chosen areas.
Contacts:
Shaftesbury PLC - 020 7333 8118
Jonathan S Lane - Chief Executive
Brian Bickell - Finance Director
City Profile - 020 7448 3244
Simon Courtenay
William Attwell
Forward-looking statements
This document includes statements which are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Shaftesbury PLC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Ends.
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