Town Centre Securities said there has been 'a notable increase in enquiries' from retailers in its vacant 120,000 sq ft store in Piccadilly Basin, Manchester.
Aldi will open a 16,000 sq ft food store in the premises later this month but re-letting the remainder of the space, once entirely occupied by Ilva before its collapse, remains a priority for TCS.
In an interim management statement covering the period from 1 July to 18 November, the listed Leeds-based group said it was hopeful of showing a 'modest increase' in the value of its portfolio at the end of 2009 compared to the middle of the year.
During the July-November interim period TCS sold the BDP Manchester studio within Piccadilly Basin to an unnamed buyer for £7m, representing a yield of 8.8%. It also sold the upper floors of its mixed-use building at 118-124 Deansgate for £1.75m at 7%. The upper floors have planning consent for 14 apartments but have yet to be redeveloped. The lower floors are let to Cotswolds Outdoor and Staples UK.
TCS said: "The tenant environment remains difficult and will remain so for the foreseeable future with further business failures and pressure on rents a constant challenge. We continue to believe that our investment portfolio, and in particular our exposure to value for money retailing, puts TCS in a good position. Despite our caution, we are seeing signs of improved tenant demand for retail and office space."
At 18 November 2009, the company had net debt of £149.7m (30 June 2009: £166.5m) comprising £106.2m of 5.375% debenture stock repayable in 2031, and £43.5m of bank loans at floating interest rates.
TCS has two term loan facilities, together £85m, with maturity dates from 2012 to 2014, and £15m of overdraft and money market facility.
Group occupancy levels improved in the period from 91.6% at 30 June 2009 to 93.0% at 9 November 2009.