LII Liberty Intl.

 

TIDMLII 
 
RNS Number : 9023B 
Liberty International PLC 
04 November 2009 
 

4 NOVEMBER 2009 
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     | 
+------------------------+------------------------+------------------------+ 
 
 
Conference call 
 
 
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 announcement 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 announcement on the price at which 
shares or other securities in Liberty International PLC have been bought or sold 
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. 
 
 
 
 
=--ENDS--- 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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