Interim Management Statement

RNS Number : 7925K

London & Stamford Property PLC

21 July 2011

 



21 July 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 from 1 April 2011 to 20 July 2011.

Highlights

·       Acquisition of One Carter Lane, London, EC4 for £75 million completed on 30 June 2011

·       Acquisition in June 2011 of Unit 5110 at Magna Park for £9.8 million from Nippon Express, to enhance the asset management opportunity within the distribution portfolio

·       Sale to Green Park Investments of a 50% equity interest in 10 of the distribution assets for £41.5 million

·       Final dividend of 3.3p for the year ended 31 March 2011 paid on 7 July 2011, bringing the total dividend for the year to 31 March 2011 to 6.3p per share, a 43% increase on 2010

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

"London & Stamford remains committed to identifying and making investments with the potential to deliver strong, sustainable income, whilst adding shareholder value through the implementation of asset management initiatives and achieving good returns on asset disposals where we consider it appropriate.

We are determined to maintain our disciplined criteria to investment in a very challenging economic environment and are delighted therefore to have secured £84.8 million of further investment during this period.

We continue to assess opportunities within the retail, distribution, Central London residential and City of London Office markets in particular and are hopeful of making further material investment during this financial year.  Our cash resources, inclusive of refinancing receipts, together with committed funds from Green Park investments amount to £300 million providing geared firepower in excess of £800 million."

Trading Update

Meadowhall

We have completed 16 new leases and exchanged contracts on a further four since 1 April 2011.  Boux Avenue and Fashion Rocks have now opened in the centre and new retailer lettings include Van Mildert, Beaverbrooks, Krispy Kreme and Vans. The occupancy rate is 97%.

The refurbishment of the Oasis Food Court is now halfway through its programme.  It is on schedule to complete in October and is ahead of budget.  New restaurants will open for Harvester, Chao Baby, Las Iguanas, Rice and Giraffe.

We have received determination of the value of our option for the surrounding development lands and are working with our joint venture partner, British Land, to complete the process.

Footfall in the centre in the calendar year to date shows positive growth (+2.7%), which is generating a positive growth in sales (+1.4%), representing significant outperformance against the national average.

Distribution

In June, we completed the acquisition of Unit 5110 at Magna Park in the heart of the distribution sector's Golden Triangle. The acquisition provides an opportunity to support an adjacent tenant within our existing distribution portfolio in securing a new contract for which two storey car parking will be required.

Unit 5110 is currently vacant and will provide temporary car parking during the construction of the two storey car park.  Thereafter, the property will be refurbished in anticipation of a lease and let into a market currently demonstrating significant demand. We anticipate a 9% ungeared yield on cost for the transaction.

Focus DIY, the tenant of our distribution unit at Tamworth fell into administration during the period and vacated the premises on 23 June 2011, having paid the rent, in full, to that date. A full marketing campaign has been launched to relet the unit and viewings by interested parties have already taken place. We are optimistic that the adverse impact on our net asset value during the year will be small.  We have agreed with our lender to repay the debt secured against Tamworth on the basis that it can be redrawn on the successful letting of the unit.

As a consequence of the Focus DIY administration, our overall occupancy rate has fallen to 84.5%.

Residential

Our residential investments at Highbury and Battersea continue to perform strongly and are both 100% let.  Where it is opportune, we will continue to consider offers to sell apartments and during the quarter we completed the sale of six flats.

These schemes will now form the base from which to establish a larger residential portfolio, with a gross value of up to £300 million, to which we would intend to apply modest gearing.  We have agreed terms with the Metropolitan Life Insurance Company to provide £25 million of debt secured against Highbury and will consider further gearing against the Battersea apartments, if appropriate.

City of London Offices

We are working to finalise the strategy for our new acquisition at One Carter Lane in the City of London. The tenant, Goldman Sachs International, has a further seven years unexpired on its lease, but with a break clause in March 2013, which is required to be exercised by March 2012.

In the event that Goldman Sachs International wish to leave the building, then it is an exciting refurbishment opportunity for a prime 125,000 sq ft office adjacent to St Paul's Cathedral. In the event that the tenant does not exercise its break option, then we consider that the 7.33% net initial yield represents excellent value.

We have agreed terms with Santander our existing lending bank at One Fleet Place in the City of London to enter into a new joint facility with DekaBank to provide debt finance to both One Fleet Place and One Carter Lane.  We will announce the terms of the facility on its completion.

Financial

No valuation of the portfolio has been undertaken since the results for the year ended 31 March 2011 were published on 26 May 2011.

As at 30 June 2011, cash at bank amounted to £88 million, a reduction on the year end balance due to the completion of our acquisition at One Carter Lane.  With the imminent completion of refinancing at Highbury and One Carter Lane, we expect cash resources to be c.£160 million.

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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