Town Centre Secs- Half Year-end Trading Update & Notice of Results

Overview

TCS has continued to make good progress in the on-going repositioning of its portfolio. Since July we have undertaken further asset recycling, made progress in the next phase of our development programme, and completed the innovative refinancing of Merrion House. Overall, continued asset recycling has reduced the proportion of retail and leisure assets to 52%, down from 70% in 2016.

The Company continues to produce consistent operational metrics, critical to delivering stable long-term underlying financial performance, despite the challenging market.

Trading

·     Overall occupancy level increased to 96% (June 2018: 95%).

·     Like-for-like passing rent up by 0.9% (FY18: 4.1%) versus a year ago, supported by the updated Merrion House lease to Leeds City Council.

·     Rent collection remains strong with 99% of rents collected within a week of the quarter commencing.

·     CitiPark continues to grow its revenues and profits.

·     Refinancing of Merrion House enhanced financial flexibility and provided an immediate benefit to our leverage ratios.

Continued repositioning of the portfolio

·     The most recent asset sales and purchases activity further reduces the proportion of retail and leisure assets to 52%, down from 70% in 2016.

·     Sale of Rochdale Central Retail Park for £13.2m in December 2018, previously generating £1.15m annual net rent.

·     Previously announced acquisitions of The Cube in Leeds for £12.8m, a retail unit in Gordon Street, Glasgow for £2.6m, and a retail and residential unit on Chiswick High Road, London for £1.7m. In total these acquisitions will generate on-going annual income of over £1.4m.

Active asset management

·     Whilst TCS has seen some disruption from retail and leisure administrations and CVAs, our experience in active asset management will result in on-going rents rising due to an enhanced mix of replacement tenants.

·     We have seen eight CVAs or insolvencies from tenants in the last 12 months including Poundworld and Mothercare, representing 2.5% of the total rent roll.

·     By December 2018, six of the eight units had been re-let with rent ahead of previous levels with new tenants including Iceland and The Works. The two most recently vacated units are being actively marketed, accounting for just 0.5% of the total rent roll.

Investing in acquisition and development opportunities in Leeds & Manchester

·     TCS continues to focus on property acquisition and development opportunities in Leeds and Manchester, which it believes have excellent prospects:

·     In Leeds:

o  The JV with Leeds City Council to develop a 126 room Apart-Hotel with additional ground floor units on George Street, has received detailed planning consent and work is anticipated to begin this year.

·     In Manchester:

o  Burlington House, a 91-unit residential private rented scheme (PRS) being developed in JV with Highgrove is on track to achieve practical completion in May 2019.

o  Eider House, our next PRS development in Piccadilly Basin, Manchester, which has detailed planning consent, is expected to commence ground works this year.

Notice of half year results

The Company expects to issue its results for the half-year ended 31 December 2018 on 26 February 2019.

Edward Ziff, Chairman and Chief Executive, commented:

"We continue to improve our portfolio and maintain our track record of managing the business for long-term success, notwithstanding that the combination of Brexit uncertainty and continued seismic change in retailing makes it a tougher environment in which to operate. This means the importance of our development pipeline, that we have built up over time into a sizable opportunity, is clearer than ever.

"Our expertise in active asset and tenant management has resulted in TCS improving future income levels from properties vacated due to CVAs and insolvencies. Furthermore, while we reduce the overall proportion of retail in our portfolio, the resulting greater focus on supermarket and convenience retailing is helping de-risk the Company from the worst of the high street disruption.

"We remain optimistic about TCS's prospects and the opportunities in our development pipeline."