Interim Management Statement

RNS Number : 7707Z

London & Stamford Property PLC

20 January 2011

 



20 January 2011

LONDON & STAMFORD PROPERTY PLC

("London & Stamford" or "LSP")

INTERIM MANAGEMENT STATEMENT

London & Stamford Property Plc (LSE: LSP.L), a leading UK property investment and asset management company  today announces its Interim Management Statement for the period 2 October 2010 to 19 January 2011.

Highlights

·      Off market acquisition in November 2010 of two further portfolios of prime distribution assets for a total value of £205 million using existing debt, which will all be refinanced

o  Agreed terms with the Metropolitan Life Insurance Company to provide a total of £133.25 million of debt

o  Double digit cash on equity return

·      Agreement reached in November 2010 with our existing joint venture partner in the Middle East, Green Park Investments, to increase their equity funding commitment to LSP by a further £100 million

·      Further agreement reached with Green Park Investments to create a new 50/50 joint venture for the distribution portfolios acquired in the period

·      Firepower in the region of £1 billion for future acquisitions

·      Following admission to the Main Market of the London Stock Exchange on 1 October 2010, LSP admitted to the FTSE 250 and to the EPRA Index on 20 December 2010

·      Significant letting activity at the Meadowhall Shopping Centre, Sheffield and very positive Christmas trading

·      Significant ongoing asset management opportunities at our 29 unit distribution portfolio

·      The 143 apartments at Highbury remain fully let, with lease renewals now attracting rent increases

·      Letting programme at Battersea has surpassed expectations

Patrick Vaughan, Chief Executive, said:

"London & Stamford continues to focus on identifying investment opportunities that provide us with attractive cash on equity returns. During the last quarter, London & Stamford acquired two further portfolios of prime distribution assets for a total value of £205 million.  Both portfolios were acquired 'off market', a further demonstration, following our acquisition of the Radial portfolio of distribution assets earlier in the year, that opportunities to acquire prime, well let assets with unexpired lease terms greater than 10 years do exist.  We believe that market conditions will continue to create opportunities for property investments with attractive equity yields and total returns, indeed, the availability of investment stock is rising, although much of it is secondary.  We will continue to be cautious on the pricing of such assets, given the uncertainties in the UK economy and the absence of demonstrable occupier demand. 

Alongside our focus on further investing our surplus cash and the equity commitments from Green Park Investments, our Middle Eastern joint venture partner, we will continue to concentrate on deriving further value from our existing portfolio by continuing to identify and implement asset management opportunities."

Acquisitions in the Period

The distribution portfolio acquisitions in the period comprise a total of ten prime distribution units (1.85 million sq ft), with an annual rent roll of £14.76 million and were acquired for £205 million.  The average weighted unexpired lease term is c.11½ years. The units are primarily located in the South East/Heathrow and in the Midlands in the 'golden triangle' between the M1, M6 and M42 motorways.

The assets were all acquired with existing debt, all of which will be refinanced.  We have agreed terms with the Metropolitan Life Insurance Company to provide a total of £133.25 million of debt, as a result of which the assets will deliver double-digit cash on equity returns.

Both portfolios were acquired in 'off market' transactions

Joint Venture Funding

We reached agreement in November with our existing joint venture partner in the Middle East, Green Park Investments, to increase their equity funding commitment to LSP by a further £100 million.  Consequently, their total unutilised commitment is now £180 million.

Further agreement has been reached with them to create a new joint venture for the distribution portfolios acquired in the period.  The 50/50 joint venture is currently in solicitors hands and will require a c.£40 million investment by Green Park, leaving £140 million of their commitment unutilised.

Firepower

This equity commitment when taken together with the group's remaining cash resources and assuming future bank borrowing at c.60%-65% loan to value will provide firepower in the region of £1 billion for future acquisitions.

Entry to FTSE 250/EPRA

Following our admission to the Main Market of the London Stock Exchange on 1 October 2010, we were admitted to the FTSE 250 on 20 December 2010 and to the EPRA Index on the same date.

Financial

No valuation of the portfolio has been undertaken since the interim results published on 24 November 2010.

As at 31 December 2010, cash at bank amounted to £130.2 million, a reduction of £58.6 million, since the interims and debt amounted to £357.8 million, an increase of £68.5 million, which is primarily due to pre-existing debt on the acquisition of the distribution portfolios acquired in the period.

Cash at bank will be increased by c.£40 million following the completion of the distribution joint venture with Green Park and will be further supplemented by the proceeds of any disposals from the residential portfolio.

Dividends

An interim dividend in respect of the financial year ending on 31 March 2011 of 3p per share was paid on 20 December 2010.

Trading Update

Retail

Letting activity at the Meadowhall Shopping Centre in Sheffield has been significant.  Fourteen shops completed fit-outs and opened for trading in the lead up to Christmas. The reconfiguration of the Oasis Food Court will commence in March. Five new restaurant units are under offer and a sixth new entrant to the scheme has confirmed their intention to take a unit.

Despite the impact of the weather and the uncertainties within the UK economy, Christmas trading was very positive and overall trading for 2010 was strong. Although there was a marginal decrease in footfall (less than ½%), sales increased by 4% in 2010 and the 147,000 visitors on 27 December was a record for the centre.  Excellent like-for-like sales growth was reported from, amongst others, Apple, All Saints, Goldsmith, BHS, House of Fraser, Boots, Marks & Spencer and Next.

With regard to the development land surrounding Meadowhall, we are seeking to finalise our option agreement with British Land to allow future development plans to be finalised.

Distribution

The distribution portfolio which now comprises 29 units offers significant asset management opportunities.

Two lease break options have been removed on units at the Daventry Rail Freight Terminal and substantive negotiations are being brought to a conclusion on nine further units across the portfolio; a mixture of new lettings of vacant space and lease extensions will eliminate vacancies and drive forward the average time to lease expiry across the portfolio towards ten years.

Residential

We continue to actively manage the residential portfolio at Highbury and Battersea.  The 143 apartments at Highbury remain fully let, with lease renewals now attracting rent increases.  In addition, we are receiving a number of unsolicited approaches to acquire apartments which are under review.

The letting programme at Battersea has surpassed our expectations and consequently the sales programme has been scaled back and we will continue to hold the majority of flats as investments.

For further information contact:

London & Stamford Property Plc Raymond Mould / Patrick Vaughan / Martin McGann	Tel: [phone]
Kreab Gavin Anderson Richard Constant / James Benjamin / Anthony Hughes	Tel: [phone]

Notes to editors:

London & Stamford Property Plc was set up to exploit opportunities that it anticipated in the UK property cycle and is a group UK-REIT. The Company has a highly experienced management team and invests in commercial and residential property, including office, retail and industrial real estate assets, principally in the UK, and has a property portfolio which now comprises 39 assets, all of which are located in the UK.

The Company is traded on the London Stock Exchange's Main Market (LSP.L) and is authorised by the FSA to carry out certain regulated activities.

Further information on the Company is available from the Company's website:  www.londonandstamford.com

Disclaimer

This document includes statements that 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 London & Stamford Property Plc to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Any such forward-looking statements speak only as of the date of this document and London & Stamford Property Plc does not undertake to update forward-looking statements to reflect events or circumstances after that date.  Information contained in this document relating to the group should not be relied upon as an indicator of future performance.

 

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