Any good news Local Shopping REIT (LSR) delivers on lettings and cash flows continues to be overshadowed by the impact of falling property values on its debt-heavy capital structure. The situation is now so critical that a strategic review was launched on 12 November, with a sale of the portfolio or company mooted. Chief executive Nick Gregory says the options should become clear before Christmas.
The basic problem is evident from these results, with the value of like-for-like portfolio having been marked down 6 per cent. As every pound of equity comes with three pounds of debt, the knock-on effect on net asset value (NAV) was eye-watering. LSR can do little to help the situation. Cash flows remain robust. The rent roll was down 1.7 per cent, reflecting rent concessions for struggling tenants and a slight increase in voids, yet that was more than offset by increased fee income from the company's expanding joint ventures. Overall, recurring profits were 5.1 per cent higher than last year.
Property values are falling not because of the rental market, which is flat, but because neither investors nor lenders have any appetite for small shops outside the south east of England. Nationwide, the Co-operative and Clydesdale & Yorkshire Bank have all but pulled out of the market, Mr Gregory reports.
LOCAL SHOPPING REIT (LSR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 35p | MARKET VALUE: | £29m | |
| TOUCH: | 35-36p | 12-MONTH HIGH: | 35p | LOW: 53p |
| DIVIDEND YIELD: | 11.4% | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 30% | |||
| INVESTMENT PROPERTIES: | £182m* | NET DEBT: | 317% | |
| Year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 112 | -40.5 | -44.5 | 5.75 |
| 2009 | 71 | -31.0 | -37.0 | 3.50 |
| 2010 | 70 | 1.8 | 2.2 | 3.60 |
| 2011 | 65 | -0.7 | -0.9 | 4.00 |
| 2012 | 50 | -9.2 | -11.3 | 4.00 |
| % change | -23 | - | - | - |
Ex-div: 5 Dec Payment: 31 Dec *Includes joint ventures | ||||
