Trading and finance update
For the period 1 July 2016 to 28 September 2016
· Good trading over the summer
· Sustained tenant demand
· Good progress with our major schemes
· Acquisitions totalling £19.5 million in second half
· Marketing of new secured sterling bond issue to refinance 8.5% First Mortgage Debenture Stock 2024 underway
With its variety and quality of attractions, coupled with a large and important local working population, London's West End continues to attract large numbers of visitors, both domestic and from overseas. Trading across our shops, restaurants, cafés and bars has been good throughout the summer months and, with sustained tenant demand across all uses and in each of our locations, available-to-let vacancy remains low.
London's global status and its importance as the largest city in Western Europe underpin its long-term prospects. The West End, with its exceptional choice of world-class attractions, shopping and innovative, accessible dining and leisure options, is a major draw for visitors and an important location for domestic and international businesses. Although the referendum vote to leave the European Union may create a period of uncertainty for businesses until new trading and other arrangements are negotiated, to date we have seen no adverse impact on occupier demand, footfall or trading.
Progress on major schemes
· Thomas Neal's Warehouse
Our scheme to reconfigure Thomas Neal's Warehouse, Seven Dials is expected to complete in October, when we will formally commence marketing this flagship accommodation totalling 22,000 sq. ft., including up to 3,000 sq. ft. of restaurant space.
· Charing Cross Road/Chinatown
Our substantial Charing Cross Road/Chinatown project remains on schedule. The scheme will provide 32,000 sq. ft. of retail on Charing Cross Road, 13,500 sq. ft. of restaurant space, fronting Newport Place and Newport Court, and create a much-improved gateway into Chinatown. The reconfiguration of the lower floors of this building is creating space with exceptional floor-to-ceiling heights, providing an opportunity to increase floor space by adding mezzanine floors in a number of locations within our scheme, if required by tenants.
Formal marketing of the scheme will commence in early 2017, once works are sufficiently progressed to show space to prospective occupiers. We expect the scheme to complete in April 2017.
We continue to support Westminster City Council's plans to create a part-pedestrianised public square in Newport Place, at the eastern end of Gerrard Street, and currently we expect works to begin following the Chinese New Year celebrations in February 2017.
· 57 Broadwick Street, Carnaby
Having completed strip out works, construction has commenced at our mixed-use project at 57 Broadwick Street, at the eastern entrance to Carnaby. Scheduled to complete in phases from late 2017, this 30,000 sq. ft. scheme will provide 8,000 sq. ft. of retail and restaurant space over the lower floors, 20,000 sq. ft. of refurbished and extended grade A office accommodation across the upper floors and two apartments totalling 2,000 sq. ft.
Each of these major schemes will bring significant long-term benefits to our neighbouring ownerships and our selection of tenants, and how they intend to use this exciting new space, will be particularly important to their success. Inevitably, with space of this size, where occupiers will be investing heavily in their fit outs, letting periods are likely to be longer than the smaller space we traditionally have to offer.
In the period since 1 April 2016, we have acquired properties, totalling £19.5 million, in Covent Garden, Soho and Charlotte Street. These comprise four shops totalling 6,000 sq. ft., a café of 2,200 sq. ft. and three apartments. These purchases bring the total of additions to our portfolio for the year to 30 September 2016 to £62.7 million.
The availability of assets to buy in our locations, which meet our strict criteria, continues to be limited. We do not expect any post-referendum uncertainties to materially change this restricted supply.
Following an EGM vote by holders of our 8.5% First Mortgage Debenture Stock 2024, we plan to redeem the existing stock in exchange for a new benchmark-sized issue of secured sterling bonds.
We are currently marketing the new bonds and, subject to market conditions, expect shortly to conclude an issue with either 12 or 15-year maturity. The new bonds would raise significant additional resources for investment in our portfolio, whilst taking advantage of historically-low long-term interest rates.
The expected cost of redeeming the existing Debenture Stock will be determined upon issue of the new bonds and, in NAV terms, is estimated currently at around 10 - 12 pence per share.
Should the bond issue proceed, we anticipate utilising some of the proceeds, over time, to cancel interest rate swaps with a notional principal of up to £55 million, which will further reduce our blended cost of debt. The associated cost will depend upon timing and the amount of the swaps cancelled, and will be advised in due course.
As previously announced, Jonathan Nicholls joined the Board on 1 September 2016 and will succeed Jonathan Lane as Chairman, on his retirement on 30 September 2016.
29 September 2016
For further information:
Shaftesbury PLC 020 7333 8118
Capital Access Group 020 3763 3400
Brian Bickell, Chief Executive
Chris Ward, Finance Director
Shaftesbury PLC is a Real Estate Investment Trust, which owns a unique real estate portfolio extending to 14 acres in the heart of London's West End - a highly popular, sought-after and prosperous destination for visitors and businesses. Our holdings are concentrated in Carnaby, Covent Garden, Chinatown, Soho and Charlotte Street.
Our objective is to deliver long-term growth in rental income, capital values and shareholder returns.
We focus on retail, restaurants and leisure in the liveliest parts of the West End. Our portfolio comprises nearly 600 shops, restaurants, cafés and pubs, extending to 1 million sq. ft., and accounting for 70% of our current income. In our locations these uses have a long record of occupier demand exceeding their availability. The portfolio also includes circa. 400,000 sq. ft. of offices and 542 apartments for rent, which provide 17% and 13%, respectively, of our current income.
In addition, we have a 50% interest in the Longmartin joint venture with The Mercers' Company, which has a long leasehold interest in St Martin's Courtyard in Covent Garden. Extending to 1.9 acres, it includes 21 shops, ten restaurants and cafés, 102,000 sq. ft. of offices and 75 apartments.
Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. Its implementation is supported by an experienced management team with an innovative approach to long-term, sustainable income and value creation, and a focus on shareholder returns. We have a strong balance sheet with modest leverage.
This document may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.
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