The Local Shopping REIT has announced its final results for the year ended 30 September 2018. During the year, the Company made a loss of £7.15m (2017 loss £0.86 million) on an IFRS basis but made significant progress with its property disposal programme. As at 30 September 2018, the company’s portfolio was valued at £22.3 million, down from £55.46m as at 30 September 2017. The chairman’s statement highlights a major achievement during the year as being was the elimination of the Company’s bank debt. This was a result of the cash generated by the Company’s programme of property sales. The Company’s bank loans were repaid in full in July 2018 and at the year-end the Company had £3.29 million of cash. This sum had increased to £18.95 million as at the publication of the company’s annual report.
Property disposal programme
The company continued with its accelerated programme of property disposals during the year, completing or exchanging contracts for the sale of 107 properties which generated £28.2m in gross sales proceeds. This represented a 2.1% discount to valuation prior to sale. The board says that, from the shareholders’ decision to initiate the disposal programme to the 30 September 2018, the company has completed or exchanged for sale on 622 properties (97% by number of the properties held in July 2013), for an aggregate gross consideration of £159.8 million.
The board says that, during the year, it has seen a decline in the sale values of properties of the type held in the company’s portfolio, as a result of the prevailing uncertain economic conditions. It says that this impacted the sales prices achieved during and after the financial year, as well as the revaluation of the remaining portfolio. As at 30 September 2018, the company held 34 property assets, valued at £9.3m. It says that, of these:
16 are under contract for sale, at an aggregate price of £4.4m;
7 are under offer for sale, at an aggregate price of £1.0m;
11 are currently being marketed, the aggregate book value of which (at 30 September 2018) is £3.9m.
The properties under contract for sale include 8 assets sold at auction earlier in December. The board says that the aggregate gross price achieved for these properties was £2.6m, representing a combined discount to 30 September 2018 valuation of 6.2%.
Board’s commentary on the net realisable value
“In the announcement published on 11 October 2018, we provided a range for the Company’s net realisable value of between 33.0 and 34.5 pence per share. As a result of auction sales performance and market trends since then we anticipate that the distribution is likely to be at the lower end of that range. The final amount will be determined by the sales of the residual property assets and the outcome of the general meeting” (see below).
Members’ Voluntary Liquidation
On 16 November 2018 the Board issued a circular to shareholders and notice of a general meeting of the Company to take place on 12 December 2018, for the purpose of approving a resolution for a solvent winding-up the Company (the Members’ Voluntary Liquidation). The Board says that it believes that this is the most effective means of returning cash to shareholders in line with the Company’s investment policy. The circular and details of the meeting are available on the Company’s website www.localshoppingreit.com. The Board says that it encourages all shareholders to attend the meeting and to vote in favour of the Members’ Voluntary Liquidation.
About the Local Shopping REIT
The Local Shopping REIT is a real estate investment trust (REIT) that is invested in a portfolio principally comprising local shopping assets in urban and suburban centres throughout the UK. The Company is now in realisation mode. Its investment policy is to undertake a progressive disposal of its assets, to enable the repayment of bank facilities and the return of surplus value to its shareholders, whilst maximising the returns from the residual property portfolio through sound asset management.