London's West End hits the slow road to recovery
Shaftesbury’s on the road to recovery, albeit gradually. The property trust owns 16-acres of prime real estate in the heart of London's West End, which is home to 612 stores, restaurants, cafés and pubs. It said Tuesday it’s “well-placed to return to sustainable long-term growth”.
A cautiously upbeat chief executive Brian Bickell said in its half-year trading statement: “Since the start of re-opening on 12 April, we are seeing an encouraging increase in demand for space and lettings and a return of footfall and spending across our locations”.
But although forecasts point to a sharp rebound in the UK economy, he warned there “remains the risk that the recovery could encounter delays and setbacks in the period ahead". He also said that as Shaftesbury doesn’t expect a material recovery in international travel to begin “until later next year”, the trust will be relying on a “significant rise in UK domestic tourists and locals coming to the West End and our villages”.
So after what he called “more than a year of unprecedented disruption”, you can guess its results for the six months ended 31 March weren’t as upbeat as its outlook.
The post-tax loss grew to £338.5m from a £287.6m loss a year ago, primarily due to £342.6m of revaluation deficits. Its wholly-owned portfolio valuation fell 10.1% year-on-year to £2.8bn, predictably concentrated in retail and hospitality.
Across the portfolio, net property income was down 42.6% on the previous year to £26.5m, mostly due to reduced rent collections and increased vacancies. There was also a 19.4% like-for-like decrease in rental income.
But at least available to-let space fell 0.7% to 8.4% and there was a further fall to 7.2% in the six weeks since 31 March. Space under offer rose 2.4% over six months to 3.5% “reflecting improved occupier demand” and increased further to 4.1% in following six weeks.
Meanwhile, 50% of contracted rents were collected for the year to 31 March with the collection rate in the six months to March standing at 43%.
Also on the upside, the trust said it signed transactions with a rental value of £14m (including 94 commercial units) across the period and saw recovery in leasing activity and encouraging levels of enquiries.
It noted momentum has continued since 31 March with 47 lettings and renewals concluded across 41,000 square feet, worth £2.1m.
“We expect occupier demand to improve further as businesses seek to locate in our lively, holistically-curated villages. Importantly, the inherent flexibility in our portfolio, and our culture of innovation, will ensure we can continue to adapt our buildings to meet the fast-changing expectations of our occupiers”, Bickell concluded.
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