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LBT - Liberty International Plc Interim Management Statement For The Period
From 1 July 2009 To 4 November 2009
LIBERTY INTERNATIONAL PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: LBT Issuer Code: LILI
("Liberty International" or the "Company")
LIBERTY INTERNATIONAL PLC INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1
JULY 2009 TO 4 NOVEMBER 2009
Highlights of the period:
- Capital Shopping Centres` occupancy improved since 30 June 2009 from 98.3
per cent to 98.9 per cent
- Excluding tenants in administration occupancy increased from 96.3 per cent
to 97.6 per cent
- Opened major new extension of St David`s, Cardiff on 22 October, increasing
the centre size to 1.4 million sq.ft. - 70 per cent committed by area, 65 per
cent by income
- Concluded GBP290 million debt facility secured on St David`s, Cardiff
(Liberty International share 50 per cent)
- Collaboration agreement signed with adjoining landowners for Earls Court
Regeneration Area
- GBP274 million net equity raised through placing of 56.1 million new shares
at GBP5.00 per share
- Net external debt of GBP3.1 billion after GBP274 million capital raise with
pro forma debt to assets 51 per cent
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: Nick Williams, College Hill, +27 (0)11 447 3030
A conference call for analysts is being held today at 9.00am GMT with a replay
facility available for 7 days. A copy of this Interim Management Statement is
available for download from our website at www.liberty-international.co.uk.
This Interim Management Statement 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
Interim Management Statement on the price at which shares or other securities
in Liberty International PLC have been bought or sol d in the past, or on
the yield on such shares or other securities, should not be relied upon as a
guide to future performance.
Group overview
Since Liberty International released its 2009 interim statement on 31 July
2009, several indicators have confirmed the improving conditions in the
property investment and debt markets in which the group operates.
Shareholders were advised in February this year that the group would not be
undertaking a quarterly valuation of investment properties at 30 September
2009. However, in terms of market benchmarks, the IPD UK all property monthly
index for the three months ended 30 September 2009 has shown capital growth of
1.2 per cent (1.8 per cent for the IPD UK monthly retail index), with a
notable firming of valuation yields offsetting the pressure on rental values.
The new GBP290 million debt facility concluded by the St. David`s Partnership,
the 50:50 joint venture with Land Securities PLC, has demonstrated that bank
financing is becoming more readily available for prime assets. The possible
return of a more active market for listed property debt securities has been
foreshadowed by a number of transactions in recent months.
The retail tenant market remains challenging but activity levels have improved
and retailer failures slowed down markedly in the third quarter.
The equity capital raise by way of a placing of 56.1 million new shares (9.9
per cent of the group`s then issued share capital) at GBP5.00 per share
completed on 5 October raising GBP274 million net of expenses. This
additional capital enables the group to resume investment in its prime UK
regional shopping centres and Central London assets after having halted in the
last quarter of 2008 all uncommitted capital expenditure, given the
exceptional financial market turbulence at that time.
Capital Shopping Centres
Operations
Occupancy at Capital Shopping Centres` (CSC`s) centres has remained high at
98.9 per cent, 97.6 per cent excluding tenants in administration (30 June 2009
- 98.3 per cent and 96.3 per cent, 31 December 2008 - 98.7 per cent and 93.6
per cent respectively). After a period of exceptionally high failure levels,
the number of tenants going into administration slowed significantly in the
quarter, affecting 20 units and GBP3 million of rental income (first six
months of 2009 125 units and GBP19.3 million of rental income). Whilst
further failures may well emerge in the next few months, the number of tenants
showing signs of distress is lower than last winter`s exceptional level.
CSC has achieved over 50 re-lettings this quarter of which around half are
short term under five years. Although overall at a significant discount to
previous rental levels the short term lettings have been important in limiting
void costs including empty rates. Demand continues from both UK retailers and
overseas entrants to the UK market, particularly for larger, well-configured
space.
Footfall continues to show a year-on-year increase of over 3 per cent for
CSC`s established centres.
Excluding tenants in administration and formal payment plans, 98 per cent of
the September quarter rent was collected within 28 days of the quarter date,
broadly equivalent to the collection rate at the June quarter date.
Developments & active management projects
The major new extension to St. David`s, Cardiff, anchored by the largest John
Lewis store outside London and their first in Wales, opened on 22 October
after three years in construction, unveiling over 50 new shops, of which
around half are retailers new to Wales. A further 30 stores are set to open
before Christmas with additional openings in the New Year. The proportion of
the extension let or in solicitors` hands has now reached 70 per cent by area
and 65 per cent by income with active negotiations in respect of a number of
other units. The response of both retailers and shoppers to this major
enhancement of Cardiff`s retail offer has been very positive.
Letting and construction activity is continuing at the major new mall, St
Andrew`s Way, Eldon Square, Newcastle due to open in February 2010 and now 88
per cent let by area and 92 per cent by income. The leisure and catering
upgrade in the Yellow and Blue Quadrants of MetroCentre, Gateshead continues
and is now 82 per cent let by area and 73 per cent by income, with the cinema
and family entertainment area due to open in December 2009.
Approximately half of the GBP274 million proceeds of the October placing have
been earmarked to fund identified active management initiatives across many of
CSC`s centres, such as continued improvement of catering facilities to extend
dwell times and trading hours, expansion of retail units into redundant
service areas and remodelling of space to create well-configured, large units
for flagship, full concept stores.
Capital & Counties
The Covent Garden estate is trading encouragingly, effectively fully let at 99
per cent, with Q3 2009 footfall ahead of Q3 2008. Capital & Counties intends
to continue to invest in the estate with individual projects falling into
three broad types. First, tactical infill acquisitions are identified to
consolidate holdings and improve north - south linkages. Second, refurbishment
and remodelling of some existing holdings is planned. Third, the group
intends to continue to be pro-active in improving overall tenant mix.
At Earls Court, Capital & Counties has signed a tripartite collaboration
agreement with Transport for London and the London Borough of Hammersmith &
Fulham. It is intended that this agreement will be replaced by a formal joint
venture in due course. The parties have agreed to work together to submit a
planning application for the comprehensive redevelopment of their interests,
which form the Earls Court Regeneration Area. The operational exhibition
business continues to perform soundly with forward bookings for 2010 at
satisfactory levels.
Consistent with its approach of recycling capital from mature assets, the
Great Capital Partnership ("GCP"), the joint venture with Great Portland
Estates PLC, has sold Spirella House, Oxford Circus, London for GBP23 million,
12.5 per cent above book value at June 2009. Further, GCP has re-geared a
number of leases with The Crown Estate in Piccadilly and Jermyn Street,
London, including extending the lease term on average from 69 years to 125
years, improving the potential for comprehensive redevelopment in due course.
Financing
On 30 September 2009 the group`s net external debt was GBP3.3 billion, with
cash of GBP547 million. The pro forma impact of the GBP274 million capital
raising which completed on 5 October is to reduce net external debt to GBP3.1
billion and improve the debt to assets ratio to 51 per cent (30 June 2009 - 56
per cent).
The St David`s Partnership has entered into a GBP290 million, five year
limited recourse debt facility secured on St David`s, Cardiff. The proceeds
can be drawn down in stages in line with progress on letting of the extension.
GBP74 million has been drawn by the Partnership to date based on income from
the original centre.
Of the GBP103 million capital expenditure anticipated for the second half of
2009, around GBP50 million has been spent in the third quarter, principally at
Cardiff. UK commitments at the end of September 2009 amounted to GBP160
million.
The group remains in compliance with all financial debt covenants. There have
been no further compliance-related debt repayments other than the GBP36
million anticipated in the Interim Report. Given more stable market
conditions, the group is re-assessing the level of cash liquidity required for
potential covenant issues. Options for most efficiently reducing the group`s
asset-specific debt are being considered, with a view to reducing the earnings
drag from the current significant cash balances. The first such action was
completed on 30 October 2009 when a net prepayment of GBP59 million of the
debt secured on Lakeside, Thurrock was made, leaving a refinancing requirement
of GBP546 million by July 2011. We are already engaged in positive
discussions with a number of lenders regarding this refinancing.
Prospects
Notwithstanding the welcome signs of improvement in the property and debt
markets and greater activity in tenant markets, short term pressure on the
group`s earnings continues, as previously indicated, from the low returns on
temporary cash holdings and the lower income attributable to short-term re-
lettings following the last year`s tenant failures.
Liberty International is now well placed to take the business forward
organically at a time of little new supply of high quality regional shopping
centre space, with the group`s prime destinations continuing to outperform
inferior locations. Following the October capital raising, the group now has
further financial resources to enable it to continue to invest in its existing
prime assets to take advantage of their scale and quality.
4 November 2009
Sponsor in South Africa
Merrill Lynch South Africa (Pty) Limited
Date: 04/11/2009 09:05:08 Supplied by www.sharenet.co.za
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