Interim Management Statement

RNS Number : 1946W

London & Stamford Property PLC

26 January 2012

 



26 January 2012

LONDON & STAMFORD PROPERTY PLC

("London & Stamford" or "LSP")

INTERIM MANAGEMENT STATEMENT

London & Stamford Property Plc (LSE: LSP.L) today announces its Interim Management Statement for the period from 1 October 2011 to 25 January 2012.

Highlights

·      The disposal of the Triangle Distribution Portfolio to Blackstone for £265 million represented a 32% return on equity since acquisition and will add a further £101 million to LSP's cash resources

·      Total firepower including committed Joint Venture funding and gearing of c. £800 million We believe significant opportunities will arise in 2012 for those investors with cash, access to debt and with the ability to move quickly

·      Paid an increased 3.5p interim dividend on 21 December 2011 in respect of this financial year

Patrick Vaughan, Chief Executive of London & Stamford, said:

"The outlook for property in the United Kingdom continues to be very uncertain with difficulties within the Eurozone continuing and remain a long way from being resolved. The UK economy also remains stagnant.

However, we strongly believe that there will be significant opportunities in 2012 for those investors with cash and access to debt with the ability to move quickly. Property lenders are unlikely to be able to meet all the demand for refinancings this year and some property investors will be unable to meet loan to value demands as part of their lenders' deleveraging processes.

We are determined to continue to make investments with the potential to deliver strong, sustainable income whilst adding shareholder value through the implementation of asset management initiatives. We consider that our significant cash balances of £96 million and corresponding firepower now represent a tremendous opportunity to do so. We took the opportunity on 23 December 2011 to capitalise on the strong demand for distribution assets by disposing of the Triangle Distribution Portfolio.  The disposal to Blackstone for £265 million represents a 32% return on our equity since acquisition and will add a further £101 million to our cash resources.

We are well positioned to take up opportunities in 2012, which we believe will allow the Company to continue its progressive dividend policy which resulted in the payment of an increased 3.5p interim dividend on 21 December 2011 in respect of this financial year."

Trading Update

Meadowhall

Meadowhall has continued to trade exceptionally well given the challenging economic environment.  The final quarter results for 2011 were excellent and, in particular, footfall in December increased by 8.6% and sales were up 7.14%.  Overall for the full calendar year, footfall growth was 1.2% and sales growth was 0.15%, despite a generally very poor picture nationally for retailing.

The anchor stores at Meadowhall, particularly House of Fraser, Next and Primark, have shown impressive sales increases in the year and, following the completion of the refurbishment works to the Oasis food court in October, the new restaurants have reported strong sales figures.

In the period since 1 October 2011, 17 new leases have exchanged, including TK Maxx, Internationale, Urban Outfitters and Carluccio's and initial letting meetings in the new year have identified exciting new tenant interest and asset management activity for 2012.  This seems to outweigh any risk to Meadowhall from recent administrations which, whilst well publicised, are likely to have only a very limited impact, with affected units likely to continue to trade under new ownership or pre pack arrangements.

Distribution

On 23 December 2011, London & Stamford exchanged contracts for the sale of 17 distribution assets comprising the Triangle Distribution Portfolio for a consideration of £265 million. The consideration exceeded the portfolio valuation at 30 September 2011 by £10 million and represented a 32% return on equity since acquisition.

The disposal into strong demand for high yielding distribution assets capitalised on successful asset management initiatives undertaken during LSP's period of ownership and will add £101 million of new cash to enhance the Company's firepower, whilst also making available for redeployment LSP's £150 million revolving credit facility with Bank of Scotland.

Elsewhere in the distribution portfolio, refurbishment works on the Focus distribution unit at Tamworth have improved the appearance and condition of the buildings and we look forward to agreeing a new lease in the near term. Rent reviews are being progressed with Royal Mail at Heathrow and with French Connection at Thurrock.

The Triangle disposal will complete in April 2012, after which the remaining distribution portfolio will comprise 13 units and more than 3 million sq ft, held in Joint Venture.

Residential

The central London residential portfolio now comprises 368 units at Highbury, Battersea, Clapham Road (The Oval) and Seward Street (Islington).

Our residential investment at Highbury continues to perform strongly.  The proportion of renewals remains very high as assured shorthold tenancies come to their conclusion.  Only one unit is currently vacant with a list of prospective tenants for its occupation.

Lettings at Battersea are steady with three flats currently under offer.  A further six flats remain vacant and are the subject of a sales campaign.  One unit has been sold in the period, crystallising a 34% return on cost.

Lettings at Clapham Road (The Oval) have continued strongly in the period, only seven of the 74 units acquired in August 2011 are still available to let.  Six units are available for sale.

We are progressing new residential initiatives, a number of which we would hope to deliver before the end of the financial year.

Financial

No valuation of the portfolio has been undertaken since the interim results for the six months ended 30 September 2011, which were published on 24 November 2011.

As at 31 December 2011, cash at bank amounted to £96 million.  We are about to complete a new debt facility secured against the residential investments at Clapham Road and Battersea for £22 million.  The Triangle disposal when complete in April 2012 will add £101 million of new cash. These cash balances when taken alongside Green Park Investments' unspent commitment to our Joint Venture and geared, produce total firepower in excess of £800 million.

During the period, the GE Pension Trust (GE) disposed of its entire 13.6% holding in the shares of the Company. The sale of this stake coincided with the retirement of Jim Mara at GE who was responsible for the investment and who was previously a director at Pillar Property Plc almost from its inception in 1991. The Board wishes to thank both GE and Jim Mara for their support.

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 and actively manages 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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