Developer LandSec bore the scars of the pain facing UK retailers on Tuesday as the firm wrote almost £200 million off the value of its property portfolio.
Hardest hit were the firm’s retail parks, including the Lakeside park in West Thurrock, which slid 4.5% to £720 million in the six months to September. The company wrote more than £100 million off its shopping centres as the pressure mounts on tenants.
In central London, LandSec lopped 2.7% off the value of its shops including the landmark Piccadilly Lights scheme, where short-term letting income failed to match initial expectations.
Combined with smaller reductions for its offices, LandSec wrote off £188 million from its £14 billion portfolio.
Chief executive Rob Noel said LandSecs would continue to cut its exposure to retail parks following a stream of disposals over the past five years.
Noel said the firm had been “relatively unscathed” by so-called creditors voluntary arrangements, where retailers slash their rent to survive, although New Look’s CVA move dented profits.
Retail profits fell £6 million to £153 million as LandSec made a £4 million provision against other firms failing to pay through the full term of the lease. “It’s the first time we’ve done it and we’re being prudent,” he said.
Noel added: “The retail park market has been more affected by CVAs than any other market. When you have a retail park with between 10 and 20 occupiers, and two of them go bust, you’ve immediately got a 10%-20% vacancy and you’ve got to fill that. There aren’t many people at the moment who want space. With the best shopping centres you can keep them full.”
LandSec said it is seeking planning permission for two mixed-use schemes in Finchley and Shepherd’s Bush which could provide 1700 homes. “They are predominantly homes to rent and there is a huge shortage in the market, particularly in zone two,” Noel added.
