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Town Centre Securities provides covid-19 update

Town Centre Securities provides covid-19 update

Town Centre Securities (TCS) has provided an update on the impact of covid-19, stating it has collected 71% of its rent for the quarter.

For the rent quarters commencing 25 March and 1 April, TCS billed £4.9m of rent and service charge. As at 8 April 2020 it collected £3.5m or 71%, with a further £0.7m or 15% deferred, totalling £4.2m or 86% of the amounts due.

This compares to over 90% in more normal circumstances at this stage. It said it was in talks with remaining tenants to agree payment plans.

The company said it was reviewing the “affordability and appropriateness” of its dividend. It declared and interim dividend of 3.25p per share totalling £1.7m in cash in February, which is due for payment in June 2020.

Impact on portfolio

Almost half (49%) of TCS’s portfolio is let to retail and leisure tenants, of which around one-third is currently open and trading to some extent.

The Merrion Estate, which makes up more than 40% of its portfolio, has one-third of its retail and leisure tenants operating including key outlets such as Morrisons, Iceland and Boots. In addition, the ibis Styles hotel and the CitiPark car park are also operating.

The CitiPark performance has been hit hardest and since the lockdown the group has seen a substantial reduction in usage and income from car parks. The company has closed seven branches.

The company’s ibis Styles hotel is the only hotel open in Leeds and is supporting the accommodation needs of key workers. In addition the company is providing free parking in a number of its CitiPark branches for NHS workers.

Financial position

As at 31 March 2020, TCS had cash in the bank plus borrowing headroom of £23.9m.

It has a £106m debenture in place until 2031, and three revolving credit facilities (RCF) falling due between April 2021 and June 2023.

The group’s three asset backed RCF loan facilities, and the debenture, each have covenants in respect of minimum interest cover ratios that are tested quarterly for the banks and annually for the debenture. At the most recent test date, in January 2020 for the banks, headroom on the respective covenants ranged between 443% and 635% compared to a covenant requirement of 175%; thus a drop in income of between 60% and 72% in any quarter would result in a breach of covenants.

The debenture test is an annual one with a covenant requirement of 100% income cover over the year. At the last test in June 2019 the cover was 210%; therefore a drop in income of over 50% for 12 months would result in a covenant breach.

Cash preservation

The company has taken a number of actions to preserve cash. It has furloughed staff across its property, car park and hotel businesses. The board has agreed to a 20% salary reduction for three months. It has deferred VAT payments and other taxes due to HMRC. It has paused all capital projects at this time, with the exception of The Cube in Leeds where work is continuing.

TOWN : Town Centre Securities provides covid-19 update

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