Aim-traded property company group Terrace Hill has "agreed in principle" to a £344m refinancing deal with its lenders, showing that banks would rather negotiate with indebted property companies rather than risk breaking them up and selling assets into a poor market.
The group's borrowing hit 133 per cent at the end of April, and its shares have slumped 75 per cent since the autumn, due to fears about how Terrace Hill would renegotiate up to 40 separate non-recourse loans secured on property assets, plus off-balance sheet joint ventures. Providing the refinancings complete as planned, the average term to maturity of the debt will be 32 months, and chief executive Philip Leech does not expect covenants to be retested in this period.
| TERRACE HILL (THG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 14.5p | MARKET VALUE: | £31m | |
| TOUCH: | 14-14.5p | 12M HIGH: | 55.5p | LOW: 13p |
| DIVIDEND YIELD: | 3.7% | TRADING STOCK: | nil | |
| DISCOUNT TO NAV: | 59% | |||
| INVEST PROPERTIES: | £45.8m | NET DEBT: | 133% | |
| Half-year to 30 Apr | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 63.0 | 4.5 | 0.85 | 0.8 |
| 2009 | 35.7 | -30.8 | -12.29 | nil |
| % change | -43 | - | - | -100 |
Click for a guide to the terms used in IC results tables.
In the six months to the end of April, the net asset value (NAV) of Terrace Hill's portfolio of secondary commercial and residential investments plus development sites fell by 27 per cent to 35.7p. The dividend has been suspended to conserve cash and the group is concentrating on adding value through planning gains. Since the period-end, it has concluded lettings to tenants, including supermarkets and government departments, which will add over £1m to the annual rent roll (currently £5.95m), in addition to selling a property worth £1.8m.
