Town Centre Securities

LN: TOWN

£115.4m market cap

217p 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

A trading update ahead of interim results on 26 February shows further progress with ongoing portfolio repositioning (retail and leisure assets have reduce to 52% from 70% in 2016), to increase income resilience and recycle capital to unlock the sizeable future growth and diversification opportunity in the development pipeline. H119 occupancy increased to 96% (FY18: 95%), with passing rent up 0.9% y-o-y on a l-f-l basis. We will review our estimates with the interims but expect that CVAs and insolvencies will have a modest negative near-term impact on income despite the majority of affected units already having been re-let at higher rents. The valuation impact is uncertain and sector-wide retail values have softened, particularly for secondary high street assets and shopping centres, while Brexit remains a more general cause of uncertainty. We estimate that based on market consensus data, softening yields may affect our forecast FY19e NAV per share by c 19p.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 19.4 N/A 7.0 13.2 16.4 8.5
2018A 19.3 N/A 6.9 13.0 16.7 6.4
2019E 20.5 N/A 6.8 12.9 16.8 8.1
2020E 20.9 N/A 7.2 13.5 16.1 7.0
Last updated on 21/02/2019
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 21/02/2019
Share price graph
Balance sheet
Forecast net debt (£m) 180.9
Forecast gearing ratio (%) 89
Price performance
%
1m
3m
12m
Actual (3.1) (9.6) (20.5)
Relative* (6.4) (13.1) (19.8)
52-week high/low 296.0p/206.0p
*% relative to local index
Key management
Edward Ziff Chairman & Chief Executive
Mark Dilley Finance Director