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Shaftesbury swings to loss after collecting only 27.6% of rents

“Tenants may be needing support well into next year,” said chief executive Brian Bickell. “The traditional lease model is falling apart”

Shaftesbury -

Shaftesbury PLC (LON:SHB) swung to a half-year loss after it collected only 27.6% of rents for invoices sent in March and the value of its Carnaby Street, Chinatown and Covent Garden portfolio fell 7.9% due to the impact of coronavirus.

The developer, which as of this month has fellow FTSE 250 peer Capco as a 26.3% shareholder, said it is in discussions with its 800 commercial tenants to agree tailored solutions on rents and charges, and aims to collect around half of rents due from April to September 2020 “over time”.

Shaftesbury said it was moving permanently to monthly rents in advance for all commercial tenants from October 2020

Vacancies rose to 4.8% from 3.7% and the majority of lettings that had been under offer at 31 March are still not yet concluded as potential tenants understandably wait for better visibility on the easing of lockdown restrictions.

With cash flows impacted by lower rent collections, net debt increased by £31.5mln to £937.3mln and the group swung to a loss after tax of £287.6mln from a profit of £38.7mln last time.

EPRA net asset value of the 15.2-acre portfolio fell 10.6% to 878p per share, largely due to a £300.2m revaluation deficit.

Chief executive Brian Bickell talked up the “long history of structural resilience” enjoyed by the economies of London and the West End and said with the group’s “agile and entrepreneurial approach to managing our assets, supported by a strong equity base and robust debt finance, we are navigating current operational challenges and positioning our portfolio to benefit from the return of confidence and activity in local, national and global economies”.

But he added: “Tenants may be needing support well into next year. The traditional lease model is falling apart.”

House broker Liberum noted that the shares, at the previous close price, were trading at a 24% discount to its new spot NAV forecast of 801p, which prices in a further 18% decline in underlying property values.

But analysts at Jefferies said Shaftesbury is “particularly susceptible to coronavirus” because of the large number of small, independent businesses on the estate, meaning the normal attractions of the “Dickensian” streets of London could become a drawback. 

The shares rose initially before reversing course and dropping 5% by Wednesday afternoon to 613p. 

    --Adds shares and broker comment--

Quick facts: Shaftesbury

Price: 580.3675 GBX

LSE:SHB
Market: LSE
Market Cap: £2.23 billion
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