TIDMSHB
RNS Number : 5248N
Shaftesbury PLC
25 September 2019
Shaftesbury PLC
Trading update
Good demand for regular space, robust leasing activity and
further acquisitions
Shaftesbury PLC, the Real Estate Investment Trust that owns a
15.2 acre portfolio in the heart of London's West End, today
announces a trading update for the period 1 April 2019 to 24
September 2019.
Highlights
* West End remains busy and our food, beverage, leisure
and retail occupiers continue, on average, to report
year-on-year sales growth.
* Continued good demand for our regular space.
* Robust leasing activity with rents being achieved at
or above ERV. Lease incentives stable.
* Vacancy remains low and consistent with long-term
average:
* Much of our available space under offer.
* Limited exposure to occupier insolvencies; where
space handed back, it has re-let well.
* 72 Broadwick Street scheme - planning consent secured
and works commenced.
* Thomas Neal's Warehouse - Seven Dials Market opened
recently.
* Further acquisitions completed, totalling GBP34.9
million since 1 April 2019.
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Brian Bickell, Chief Executive, commented:
"Our exceptional 15.2 acre portfolio, located in some of the
busiest parts of the West End, continues to perform well. The small
to medium-sized space we mostly provide, combined with our modest
rental levels, are a considerable advantage in the current market,
attracting good levels of interest. Our long-established tenant
selection strategy has ensured that we have been largely unaffected
by high-profile retail and restaurant failures and
restructurings.
We continue to convert our portfolio's reversionary potential
into contracted income, whilst delivering further long-term growth
in rental values. During the period since 1 April 2019, leasing
activity has been robust, rents continue to be achieved at or above
ERV and lease incentive levels have remained stable. Vacancy
remains low and consistent with our long-term average; much of our
available space is under offer.
Despite the uncertain political and macroeconomic backdrop,
London's global city status continues to draw businesses and
visitors from across the World, reinforcing the West End's
long-term appeal and prospects."
25 September 2019
For further information:
Shaftesbury PLC 020 7333 8118 RMS Partners 020 3735 6551
Brian Bickell, Chief Executive Simon Courtenay
Chris Ward, Finance Director
MHP Communications 020 3128 8100
Oliver Hughes/Reg Hoare
Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98
Overview
The unique features of London's West End, its dynamic,
broad-based, seven-days-a-week economy and global reputation
underpin its continuing resilience, prosperity and prospects.
Our exceptional 15.2 acre portfolio, located in some of the
busiest parts of the West End, continues to perform well. Our
proven strategy is operationally-focussed and brings an
entrepreneurial approach to the curation of our locations. The
small to medium-sized space we mostly provide, combined with our
modest rental levels, are a considerable advantage in the current
market, attracting good levels of interest. Our skill in adapting
the space in our buildings, through reconfiguration or change of
use, is invaluable in meeting changing occupier demand and
requirements.
We focus on food, beverage, leisure and retail uses and
recognise the complementary benefits of a mix of activities in our
areas. Over recent years, our strategy has been to increase the
number of interesting casual dining and leisure concepts in our
popular, high-footfall locations to meet growing interest and
spending on leisure activities. Food, beverage and leisure is an
important driver of footfall, dwell-time and trading in our
villages and now accounts for 38% of our income, up from 28% ten
years ago. Over that same period, the proportion of income from
retail has fallen from 42% to 32%.
The uncertainty over the timing and terms, if any, of the UK's
exit from the European Union continues to dominate sentiment.
Government studies suggest a "no deal" Brexit could result in
potential short-term disruption to business supply chains, which
would be unwelcome, particularly in the important lead up to the
Christmas and New Year trading period.
Nationally, political and macroeconomic uncertainties continue
to weigh both on business and consumer confidence. Whilst London
cannot be completely sheltered from these headwinds, its global
city status continues to draw businesses and visitors from across
the World, reinforcing the West End's long-term appeal and
prospects.
Operating environment
Despite reports of a small decline in overseas visitor numbers,
mainly attributed to fewer European tourists, the West End remains
busy. In our areas, the largest components of daily footfall
comprise the huge local working population and daily visitors from
across London and the Home Counties.
Structural changes in shopping and spending patterns continue to
have a considerable impact on businesses exposed to these
nationwide trends. Our long-established tenant selection strategy
focusses on interesting, innovative concepts and independent
businesses, rather than formulaic formats and national chains.
Consequently, we have been largely unaffected by high-profile
retail and restaurant failures and restructurings. In the financial
year to date, tenant insolvencies have accounted for less than 2%
of portfolio ERV and, where space has been handed back, it has
re-let well.
Where we collect data, our food, beverage and retail occupiers
have, on average, reported increased year-on-year sales for the
quarter ended 30 June 2019. Business profitability continues to be
affected by operating cost pressures, for example from higher
import prices and increasing employment costs as staff shortages
grow.
We continue to convert our portfolio's reversionary potential
into contracted income, whilst delivering further long-term growth
in rental values. During the period since 1 April 2019, leasing
activity has been robust, rents continue to be achieved at or above
ERV and lease incentive levels have remained stable. Vacancy
remains low and consistent with our long-term average; much of our
available space is under offer. At Central Cross, there are now
just two shops available, one of which is under offer.
Earlier this month, the Seven Dials Market opened in Thomas
Neal's Warehouse, a 23,000 sq. ft. Victorian warehouse in the heart
of Seven Dials. The concept is a hybrid operation providing an
exciting line-up of street food concepts, a bar and a market
selling fresh produce. This has increased the food and beverage
offer in Seven Dials, further improving this popular and
distinctive village destination.
Schemes
-- 72 Broadwick Street, Carnaby (31.3.2019: 3.8% of total ERV)
Having secured planning consent for our 77,100 sq. ft. mixed-use
scheme at 72 Broadwick Street in June, we have now commenced
works.
The scheme will provide new retail, restaurant and leisure
space, activation of the ground floor frontage on Broadwick Street,
extended and refurbished office accommodation and 15 new apartments
on the top floor.
At an estimated cost of GBP32 million, the project will take
around two years with completion in phases from late 2020.
-- Other schemes: (31.3.2019: 5.5% of total ERV)
Currently, we have over 40 other schemes underway, a number of
which will complete over the coming three to six months, and, once
let, will provide a useful boost to income. With resilient demand
for space in our locations, we continue to investigate and progress
new schemes to improve the rental prospects and value of our
buildings. In particular, we are identifying opportunities to
reconfigure some of our larger shops and restaurants to take
advantage of demand for smaller space. Often, this enables us to
repurpose space to introduce new, complementary uses, whilst
maintaining or enhancing rental income.
Longmartin Joint Venture
The Sussex House mixed-use commercial scheme completed in May
2019. The flagship prominent retail unit at the corner of Upper St
Martin's Lane and Long Acre is being marketed and all the 7,500 sq.
ft. of office accommodation is either let or under offer.
The scheme to reconfigure the north side of St Martin's
Courtyard to create three restaurants, each with outside seating,
is currently expected to complete in late 2019 and marketing has
commenced. The dining offer will be further enhanced in 2020 when
two restaurants fronting Upper St Martin's Lane and backing on to
the courtyard are combined to create a 10,000 sq. ft. flagship
unit, let to Dishoom under a new lease.
As previously reported, on Long Acre, a street characterised by
large retail space, relatively high rents and fragmented
ownerships, rental tones are under pressure as vacancy is
increasing generally. The joint venture has two large adjoining
shops (12,000 sq. ft.; our 50% share of ERV: GBP0.7 million) which
are now effectively vacant. Plans are being prepared to reconfigure
the combined space to reduce the retail element and introduce
alternative uses at first floor.
Acquisitions
Since 1 April 2019, we have completed acquisitions totalling
GBP34.9 million (including costs), comprising three shops, one
restaurant and 2,600 sq. ft. of office space. This brings total
acquisitions for the financial year to GBP47 million.
Currently, macroeconomic uncertainty is having a noticeable
effect on West End transaction volumes. The availability of
properties to buy in our locations and which meet our strict
criteria continues to be exceptionally limited, as existing owners
remain reluctant to dispose of assets which offer both security and
long-term growth prospects.
The forward-purchase of a long leasehold interest in 90-104
Berwick Street has been further delayed and we now expect the
vendor to complete the development in early 2020. The Board
continues to monitor the situation closely.
Notes for Editors
Shaftesbury is a Real Estate Investment Trust which owns a
portfolio extending to 15.2 acres in the heart of London's West
End. Shaftesbury focuses on restaurants, leisure and retail in
highly popular, sought-after and prosperous locations mainly
concentrated in Carnaby, Seven Dials and Chinatown, together with
substantial ownerships in East and West Covent Garden, Soho and
Fitzrovia.
The portfolio comprises 605 restaurants, cafés, pubs and shops,
extending to 1.1 million sq. ft., 0.4 million sq. ft. of offices
and 605 apartments. All our properties are close to the main West
End Underground stations, which currently handle c. 228m passengers
p.a., and within ten minutes' walk of the two West End transport
hubs for the Elizabeth Line, at Tottenham Court Road and Bond
Street, which long-term projections indicate could be handling 200
million passengers annually.
In addition, we have a 50% interest in the Longmartin joint
venture, which has a long leasehold interest, extending to 1.9
acres, in St Martin's Courtyard in Covent Garden.
Our proven management strategy is to create and foster
distinctive, attractive and prosperous locations. We have an
experienced management team focused on delivering our objective of
long-term growth in rental income, capital values and shareholder
returns. We have a strong balance sheet with conservative
leverage.
Forward-looking statements
This document, the latest Annual Report and Shaftesbury's
website may contain certain "forward-looking statements" with
respect to Shaftesbury PLC (the Company) and the Group's financial
condition, results of its operations and business, and certain
plans, strategy, objectives, goals and expectations with respect to
these items and the economies and markets in which the Group
operates. Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"anticipates", "aims", "due", "could", "may", "should", "expects",
"believes", "intends", "plans", "targets", "goal" or "estimates"
or, in each case, their negative or other variations or comparable
terminology.
Forward-looking statements are not guarantees of future
performance. By their very nature forward-looking statements are
inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. Many of these
assumptions, risks and uncertainties relate to factors that are
beyond the Group's ability to control or estimate precisely. There
are a number of such factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements.
Any forward-looking statements made by, or on behalf of,
Shaftesbury PLC speak only as of the date they are made and no
representation or warranty is given in relation to them, including
as to their completeness or accuracy or the basis on which they
were prepared. Except as required by its legal or statutory
obligations, Shaftesbury PLC does not undertake to update
forward-looking statements to reflect any changes in its
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
Information contained in this document relating to Shaftesbury
PLC or its share price, or the yield on its shares, should not be
relied upon as an indicator of future performance. Nothing
contained in this document, the latest Annual Report or
Shaftesbury's website should be construed as a profit forecast or
an invitation to deal in the securities of the Company.
Ends
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END
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