Town Centre Securities

LN: TOWN

£108.3m market cap

204p last close

Town Centre Securities is a UK REIT focused primarily on Leeds, Manchester, Scotland and (mainly suburban) London. It also has a car parking operation (CitiPark). The investment portfolio is intensively managed for income and capital growth.

Investment summary

H119 saw continued progress with unlocking value from the development pipeline, particularly focused on offices and residential assets. Underlying operational performance was robust with a challenging retail environment well managed. Occupancy and like-for-like rent roll increased and car parking operating profits were c 14% ahead. However, EPRA earnings reduced by 8.8% y-o-y to £3.7m (H118: £4.0m, H218: £3.9m), and EPRA EPS to 6.9p, due to the negative effect of specific items. The unchanged 3.25p interim DPS remained well covered and we note that TCS has a strong focus on dividend returns and has increased or maintained DPS in each of the last 58 years, while investing for growth. Weaker property asset values, particularly in retail, resulted in NAV per share falling 6% to 361p and our forecasts assume no further revaluation movements although retail conditions remain tough. Our multi-year estimates capture only a small part of the development pipeline opportunity that is available within the current portfolio, subject to funding.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 19.4 13.8 7.0 13.2 15.5 6.0
2018A 19.3 13.6 6.9 13.0 15.7 7.6
2019E 20.1 13.4 6.4 12.1 16.9 7.5
2020E 20.4 13.6 6.6 12.4 16.5 7.3
Last updated on 16/07/2019
Industry outlook

The supply demand balance for regional office and industrial property remains generally firm, and a positive yield spread between the regions and London offers potential for further narrowing. Parts of the retail sector are displaying clear signs of stress.

Last updated on 16/07/2019
Share price graph
Balance sheet
Forecast net debt (£m) 173.3
Forecast gearing ratio (%) 90
Price performance
%
1m
3m
12m
Actual 2.0 (3.8) (29.2)
Relative* (1.0) (4.7) (28.2)
52-week high/low 290.0p/199.0p
*% relative to local index
Key management
Edward Ziff Chairman & Chief Executive
Mark Dilley Finance Director