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Town Centre's developments maturing nicely

Town Centre Securities is set to boost rental income as further developments are completed.
February 24, 2017

It was very much a 'work in progress' six months for regional property developer Town Centre Securities (TOWN), with a number of projects nearing or reaching completion. The Premier Inn at Whitehall Road in Leeds was finished, while Merrion Hotel and a Marco Pierre White restaurant will open in April. All in all, the development programme is on track to generate £1.8m of extra rent per year.

IC TIP: Buy at 274.9p

The jewel in the crown remains the Merrion Centre in Leeds, where visitor numbers rose 3.4 per cent to record levels. The Arena Quarter is now fully let, having been given a £6.5m refurbishment, and the total rent roll now stands at £820,000 per year, up from £240,000 before work started. Redevelopment of Merrion House will cost £34m, of which £18m will be funded by joint venture partner Leeds City Council, and is due for completion by the end of 2017. The new office complex is expected to generate extra annual income for Town Centre of £900,000.

To help fund the work, Town Centre has been recycling assets, selling off two properties in Edinburgh for £2m, and further Scottish properties are currently under offer.

Analysts at Liberum are forecasting adjusted net asset value of 343p at the year ending December 2017, rising to 363p in 2018 (from 357p in 2016).

 

TOWN CENTRE SECURITIES (TOWN)
ORD PRICE:280pMARKET VALUE:£149m
TOUCH:280-285p12-MONTH HIGH:332pLOW: 260p
DIVIDEND YIELD:4.0%DEVELOPMENT PROP:nil
DISCOUNT TO NAV:23%
INVESTMENT PROP:£359m*NET DEBT:99%

Half-year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201535911.721.93.1
20163552.64.93.25
% change-1-78-78+5

Ex-div: 25 May

Payment: 23 Jun

*Includes joint ventures