The property investor and developer, whose assets include Burlington House and Ducie House in Manchester, reported a net loss for the six months ended 31 December 2019 following a portfolio revaluation.
Town Centre Securities, whose interests span Manchester, Leeds, Glasgow and London, netted a statutory loss of £0.2m for the period against a like-for-like loss of £8.7m the previous year, as its portfolio value shrunk by 1.8% to £361.4m.
“The application of [accounting standard] IFRS 16 for the first six months of the year had the effect of reducing both profits and net assets by £0.3m,” TCS said in a statement.
“Reflecting the diversified and intensively managed nature of our assets, the like-for-like portfolio decreased in value by only 1.2%, despite the continued pressure on retail valuations generally in the marketplace.”
Pre-tax earnings grew by 18.5%, or £0.7m, year-on-year to £4.4m as the firm disposed of high-risk retail units and invested in the rest of its portfolio.
The pre-tax earnings increase, measured through the different, EPRA, standard common for property companies, was driven primarily by receipt of £0.5m from a tenant exiting The Cube residential scheme in Leeds, which had to pay for repairs at the end of its lease.
Across the rest of the portfolio, administrative expenses were down £0.2m year-on-year due to one-off professional fees incurred the previous year, while interest costs were down by £0.1m due to lower borrowing levels, which also boosted earnings.
Net revenue was down £0.1m, with reductions in property income mainly due to the disposal of Rochdale Retail Park the previous year, TCS said.
The firm saw new and renewing tenants including Co-op, Dominos, We are Cow, OKA, Greggs and Whittard, but said it is continuing to reduce its exposure to retail assets in the months ahead.
“The ongoing diversification of our portfolio, which represent only 35% of the portfolio, will continue as we actively look to further sell retail assets,” TCS said.
Full-year net revenue is expected to be more significantly down year-on-year as a result of lower income from The Cube, which is to undergo a redevelopment.
Meanwhile, TCS is investing £2m in refurbishing Ducie House in Manchester, a 33,000 sq ft multi-tenant office space that it acquired in 2018.
The company handed over Burlington House, a private-rented apartment scheme at Manchester’s Piccadilly Basin designed by architect SimpsonHaugh and built by GMI Construction, last May, TCS noted.
The 11-storey project was delivered in partnership with Highgrove Group and includes 91 one, two, and three-bed apartments.
The Burlington House JV company was refinanced during the six-month period, according to TCS.
Edward Ziff, TCS chairman and chief executive, said: “In our sixtieth year, I am pleased to report a resilient set of results and the continuation of our strong dividend track record.
“We continue to invest in our assets, with significant redevelopment schemes underway in both Leeds and Manchester. Progress with our development pipeline continues, following the successful completion of [ Burlington House].
“A combination of the diversified nature of our portfolio, the quality of our retail assets with its particular focus on supermarket, discount and convenience, our skill at intensively managing our assets, and our redevelopment programme have all supported our asset valuation.”