| Wed 5 May 2010, 8:01 | | LBT - Liberty International Plc - Interim management statement for the period |
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LBT
LILII
LBT - Liberty International Plc - Interim management statement for the period
from 1 January 2010 to 5 May 2010
LIBERTY INTERNATIONAL PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: LBT
Issuer Code: LILI I
INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JANUARY 2010 TO 5 MAY 2010
Liberty International PLC today announces its interim management statement for
the period from 1 January 2010 to 5 May 2010:
Patrick Burgess, Chairman of Liberty International, commented:
"We are pleased that the UK retail market has stabilised. Capital Shopping
Centres` occupancy has been maintained at 98 per cent. We have seen a much
lower level of retailer failures than the first quarter of 2009. With the
pipeline of new shopping centres sharply curtailed by recent economic
conditions, prospects for the performance of CSC`s existing assets are
encouraging. In the case of Capital & Counties, central London has continued
to perform strongly with Covent Garden recording continuing increases in
footfall.
The demerger announced on 9 March is now largely complete and we expect the
two companies to start to trade separately on 10 May. We believe that Capital
Shopping Centres and Capital & Counties are well positioned as stand-alone
businesses to execute their own significant strategic plans and deliver strong
shareholder returns over time. "
A copy of this press release is available for download from our website at
www.liberty-international.co.uk.
Enquiries:
Liberty International PLC:
David Fischel Chief Executive +44 (0)20 7960 1207
Ian Durant Finance Director +44 (0)20 7960 1210
Kate Bowyer Investor Relations +44 (0)20 7960 1250
Public relations:
UK: Michael Sandler, Hudson Sandler +44 (0)20 7796 4133
SA: Nicholas Williams, College Hill +27 (0)11 447 3030
This announcement 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 Liberty International PLC to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Any information contained in this announcement on the
price at which shares or other securities in Liberty International PLC have
been bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future performance.
Highlights of the period
- Announcement of proposed separation of Liberty International into a prime
UK regional shopping centre REIT, Capital Shopping Centres (CSC), and a
central London focused, non-REIT property company, Capital & Counties
(Capco), by way of a demerger of Capco
- Demerger approved at the EGM on 7 April, separate trading expected to
commence 10 May on the London Stock Exchange (LSE) (Capco on a "when
issued" basis) and on the JSE Limited (JSE)
- Occupancy of Capital Shopping Centres` established centres maintained at
97.7 per cent at 31 March 2010 (31 December 2009 - 97.8 per cent) with 43
new lettings in the first quarter
- Net external debt of GBP3.3 billion at 31 March 2010 (CSC GBP2.8 billion,
Capco GBP0.5 billion) (31 December 2009 GBP3.2 billion) with pro forma
debt to assets based on 31 December 2009 property valuations for CSC of
56 per cent and Capco of 38 per cent
- GBP525 million, seven year refinancing of debt secured on Lakeside,
Thurrock concluded in January
- St Andrew`s Way mall, the approximately 400,000 sq. ft. extension to
Eldon Square, Newcastle, opened fully let in February with an immediate
positive impact on the Centre`s footfall and bringing a number of new
retailers to the city
The demerger
The separation of Liberty International PLC into two strong and focused
businesses, Capital Shopping Centres Group PLC (CSC) and Capital & Counties
Properties PLC (Capco), is expected to become unconditional this week followed
by the commencement of trading in the new shares on Monday 10 May on the LSE
(Capco on a "when issued" basis) and on the JSE. This week`s confirmation by
the Court of Liberty International`s reduction of capital marks another
significant step towards completion of the demerger process which positions
both CSC and Capco to execute their own significant strategic plans and to
deliver strong shareholder returns over time.
After a week of trading on a "when issued" basis, Capco ordinary shares are
expected to be admitted to trading on the LSE on Monday 17 May. The LSE and
JSE codes for CSC will be CSCG and CSO respectively and those for Capco will
be CAPC and CCO respectively.
Financing
On 31 March 2010 the Group`s net external debt was GBP3.3 billion, with cash
of GBP395 million (31 December 2009 GBP3.2 billion and GBP583 million). Based
on 31 December 2009 asset values, the 31 March 2010 pro forma debt to assets
ratio was 52 per cent (CSC 56 per cent, Capco 38 per cent) (31 December 2009
51 per cent). At 31 March 2010 the weighted average debt maturity was 5.7
years (CSC 6.1 years, Capco 3.7 years) (31 December 2009 5.1 years) and the
weighted average cost of gross debt was 5.7 per cent (CSC 5.7 per cent, Capco
5.6 per cent) (31 December 2009 5.9 per cent).
Cash of GBP174 million was applied to repayment of debt facilities and swap
amendments between 31 December 2009 and 31 March 2010, comprising the GBP150
million of prepayments and refinancing of loans and termination of interest
rate swaps referred to in the 2009 preliminary results and other scheduled
loan repayments. This includes the refinancing of the outstanding loans of
GBP546 million secured on Lakeside, Thurrock, with a new seven year, GBP525
million facility secured on the same asset. The net cash outflow includes
GBP70 million for termination and amendment of interest rate swaps (11p per
share in NAV terms). This and the GBP24 million of net capital expenditure and
GBP11 million of REIT entry charge were the principal components in the
increased Group net external debt. The pro forma cash and net debt positions
of CSC and Capco are as follows:
Group CSC Capco
GBPm GBPm GBPm
Cash at 31 December 2009: 582 319 263
Debt repayment and swaps (174) (123) (51)
Net capital expenditure (24) (22) (2)
REIT entry charge (11) (10) (1)
Other cash flows 22 18 4
Cash at 31 March 2010: 395 182 213
Gross external debt (3,678) (2,997) (681)
Net external debt: (3,283) 2,815) (468)
The group is in compliance with all financial debt covenants. The Xscape
Braehead Partnership, CSC`s 50 per cent joint venture with Capital & Regional,
has renegotiated the terms of and partially prepaid its GBP49 million asset-
specific loan facility due in 2014, with the loan to value covenant waived for
two years.
Property valuation and market background
The UK property market has continued to show underlying strength in the first
quarter of 2010 with the IPD all property monthly index showing capital growth
for the quarter of 3.9 per cent. The IPD retail monthly index showed 4.4 per
cent capital growth and the underlying picture of UK retail sales in the first
quarter has been satisfactory with the BRC reporting a 1.8 per cent increase
in national like-for-like non-food sales. Consistent with recent practice, the
group has not undertaken quarterly property valuations as at 31 March 2010.
Capital Shopping Centres trading and prospects
Occupancy of established centres, treating tenants in administration as
unoccupied, has remained high at 97.7 per cent (31 December 2009: 97.8 per
cent). Compared with the exceptionally high tenant failure levels of the first
quarter of 2009 (92 units and 4.1 per cent of passing rent), the first quarter
of 2010 saw just 18 units and 0.7 per cent of passing rent enter
administration.
Activity in the letting market has remained positive. CSC achieved 43 lettings
in the first quarter producing an aggregate increase of GBP1.8 million (117
per cent) in annual passing rent:
- The first quarter of each year is typically slow for long term lettings;
12 long term deals were signed in the first quarter of 2010, in aggregate
8 per cent below ERV
- The 13 short term deals signed in the quarter are around 25 per cent
below previous passing rent which compares favourably with an average of
35 per cent below in 2009. 7 turnover only deals and 11 CSC Enterprises
licenses were also agreed
In addition, progress has been made in re-letting units let in 2009 on a
temporary basis. These temporary leases provide a GBP20 million rental
opportunity on expiry as they represent 7 per cent of 31 December 2009 ERV but
only 2 per cent of rent roll at that date. Currently around a sixth of these
temporary leases are in advanced re-letting negotiations on terms which, if
concluded, would significantly improve annual passing rent for these units.
Estimated footfall is up over 3 per cent year-on-year for CSC`s established
centres, building on 2009`s footfall increases.
Excluding tenants in administration and formal payment plans, 95 per cent of
the March quarter rent was collected within 28 days of the quarter date
(previous quarter: 95 per cent; first quarter of 2009: 92 per cent).
The St. David`s Partnership continues to make letting progress with the 1
million sq. ft. extension to St. David`s, Cardiff, which opened in October
2009. 90 shops are now open and trading. The proportion of the extension let
or in solicitors` hands has now reached 76 per cent by area and 74 per cent by
income (9 March 2010 - 74 per cent and 71 per cent respectively) including a
further seven new retailers to Wales and two new to UK shopping centres. New
openings include Carluccio`s, JoJo Maman Bebe and Hollister. An additional 3
per cent of income is under advanced negotiation, with continued new tenant
interest and strong footfall throughout the centre.
CSC opened its major new mall, St Andrew`s Way, Eldon Square on 16 February
2010. The mall is fully let and the opening has been a huge success with both
retailers and consumers alike. Footfall has been strongly ahead since opening,
with new retailers such as Apple, Hollister, Superdry and Guess introduced to
the city.
With the leisure and catering upgrade in the Yellow and Blue Quadrants of
MetroCentre, Gateshead, CSC has added significantly to the Centre with a new
Odeon cinema featuring the region`s first IMAX screen and a family dining
area, with the last phase opening in Autumn 2010. The new space is now almost
fully let with 98 per cent of area and 96 per cent of income exchanged or in
solicitors` hands.
In addition to existing capital commitments, work continues on CSC`s GBP125
million of identified revenue-enhancing active management opportunities. For
example detailed planning consent has now been received for the new 60,000 sq.
ft. flagship store for Next at Eldon Square, Newcastle with various other
remodelling projects in the planning process. In addition, CSC is continuing
to explore the feasibility of a number of major extensions to larger centres
with a view to strengthening their market position.
Capital & Counties trading and prospects
The Covent Garden estate is trading well with portfolio occupancy being
maintained at 99 per cent and footfall for the first quarter over 10 per cent
higher than the same period of 2009. Rent collection is at a similar level to
the previous quarter with 98 per cent received to date.
Good tenant re-engineering progress has been made in the quarter with 4 new
tenants introduced, 12 leases renewed and 6 rent reviews settled. Contracts
have been exchanged with HMV for the surrender of their unit in King Street
and negotiations are ongoing with potential new occupiers in line with the re-
zoning strategy for the estate. Terms have just been agreed with Caprice
Holdings for a new concept restaurant in the Flower Cellars building in place
of Rex Restaurants. Work continues at the flagship store in Bedford Chambers
which is due to open later in the year.
Earls Court & Olympia`s exhibition and conference business has performed as
expected in the first quarter, with the lower level of advance bookings
received last year reflected in a lower EBITDA than the same period in 2009.
Forward licence fee bookings for 2010 have remained at satisfactory levels.
Progress in relation to the Earls Court Redevelopment Area (ECRA) has
continued with considerable momentum and we will shortly be submitting our
final representations to the London Plan. We are also progressing a joint
venture agreement between all three land owners within the ECRA with a view to
providing for a development that meets the aspirations of all stakeholders on
a commercially viable basis.
Other activities of Capco including the Great Capital Partnership and the
international activities have continued to perform satisfactorily.
Disposals
The Group continues to actively explore tax efficient options to exit over
time its direct investment in the USA.
The final pre-conditions for the disposal of Westgate, Oxford, for GBP56
million were met in April and, as such, the transaction reported in our March
press release has completed.
5 May 2010
Sponsor
Merrill Lynch South Africa (Pty) Limited
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