TCS sees rising values on horizon

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.

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