Shaftesbury Group posts huge loss after GBP700mln West End property write-down

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Shaftesbury Group PLC (LON:SHB), the West End-focused property group, plunged into the red in its latest full-year numbers and said it was still only collecting around 50% of rents due to coronavirus (COVID-19) restrictions.


Losses in the year to September 30, 2020, jumped to GBP699.5mln (2019: profit GBP26mln) almost all of which was the result of a GBP689mln property revaluation reflecting the impact of the virus on restaurants, pubs and offices in Chinatown and other parts of central London.


Property values tumbled 18% to GBP3.1bn, while net income dropped to GBP23.7mln to GBP74.3mln as rent collections were significantly below normal levels, said Shaftesbury.


For the second half of the financial year, cash collections represented 53% of contracted income.


The amount of vacant space across the West End, in general, and in its portfolio, has increased significantly it added.


At of September 30, 2020, wholly-owned EPRA vacancy was 10.2%, compared with a 10-year pre-coronavirus average of 2.9%. By November 30, 2020, it had risen to 12.0%.


The announcement came just a day after London was moved into Tier-3, the highest level of COVID-19 restrictions, after a new spike in infections.


Brian Bickell, Shaftesbury‘s chief executive, said the focus has been to preserve the company’s cash position during the crisis which included a GBP294mln equity raise in November.


Bickell noted that Shaftesbury is working on the basis that pandemic control measures are likely for much of 2021 but with the impact reducing as conditions improve.


Following that, there should be a gradual sustained return of local and domestic footfall as confidence returns and Bickell said the priority is to maintain occupancy and street-level activation.


To help with this, Shaftesbury is currently offering part-waivers of contracted rents; drawing on rental deposits, restructuring leases and altering payment plans including a shift to monthly rents across its portfolio.


Liquidity is around GBP336mln said the FTSE 250 group, which, it added, is sufficient for the next two years at current cash burn rates.


Broker Peel Hunt has a target price of 600p and a hold rating and said that rental values might still have further to drop, though more encouragingly Shaftesbury is starting to see more enquiries.


Shares fell 4.4% to 525p.




— adds broker line and share price —

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