Town Centre Securities Plc - COVID-19 Update
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Town Centre Securities PLC
('The Company' or 'TCS')
Town Centre Securities Plc today provides an update on the impact of COVID-19 on its business.
The health and well-being of our staff and stakeholders is of paramount importance. Since the outbreak of the virus we have been following the latest official government guidelines and advice across our portfolio, and the vast majority of staff are working from home.
Ongoing liquidity of the business remains a key focus:
- As at close of business 31 March 2020 TCS had cash at bank plus borrowing headroom of £23.9m
- This headroom is based on our asset valuations as at 31 December 2019. We have a £106m debenture in place until 2031, and three bank RCF facilities falling due between April 2021 and June 2023.
- We have strong and longstanding relationships with our banking partners and continue to be in regular dialogue with them.
- 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 twelve months would result in a covenant breach.
Our main priority is the management and preservation of cash:
- We are in detailed and on-going discussions with our tenants.
- For the rent quarters commencing 25 March and 1 April TCS billed £4.9m of rent and service charge. As at 8 April we have collected £3.5m or 71%, with a further £0.7m or 15% of payments that we have agreed to defer, totalling £4.2m or 86% of the amounts due.
- This compares to over 90% in more normal circumstances at this stage.
- We continue to work with remaining tenants to agree payment plans. Many of these tenants are awaiting receipt of government support which we hope will, to some degree, unlock further payments.
- Our next key quarter date in May relates to our Scottish properties where we will bill c. £0.7m of rent and service charge costs.
- We are furloughing staff across our property, car park and hotel businesses.
- The Board has agreed to a 20% salary reduction for three months.
- We are in the process of agreeing further cost saving initiatives.
- We have deferred VAT payments and other taxes due to HMRC.
- We have paused all capital projects at this time, with the exception of The Cube in Leeds where work is continuing and we are closely monitoring the situation with the contractor.
From an operational and community perspective:
- 49% of our portfolio is let to retail and leisure tenants of which approximately one third of those properties are currently open and trading to some extent.
- The Merrion Estate, which makes up more than 40% of our 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.
- CitiPark performance has been hit hardest and since the lockdown we are seeing a substantial reduction in usage and income of our car parks. We are working hard to reduce costs, and have currently closed seven branches.
- We are currently supporting essential services and workers, and are actively engaged in the community, particularly in Leeds. Our ibis Styles hotel is the only hotel open in the city and we are supporting the accommodation needs of key workers. In addition; we are providing free parking in a number of our CitiPark branches for NHS workers.
Guidance and dividend:
- Overall it is too early to quantify the impact of COVID-19 on the business; as a result we are suspending all previous guidance on performance at this time.
- The Board have discussed dividend policy, noting the interim dividend of 3.25p per share totalling £1.7m in cash (declared in February) which is due for payment in June 2020. No decision regarding dividend payment has been made at this time, but the Board will continue to review the affordability and appropriateness of such payments.
Edward Ziff, Chairman and Chief Executive commented:
"These are unprecedented times and we are working tirelessly to support all of our stakeholders whilst doing everything possible to manage the business through this challenging period. I am encouraged by the level of rent received for the current quarter and want to thank our tenants for working with us. TCS has proven to be a conservative and resilient business over its sixty-year history, and I believe that continues to be the case.
"We welcome the measures the Government is putting in place to support the business community, and hope that the business rates relief given to retail and leisure operators will be extended to car park operators such as TCS, all of whom are being impacted by the lockdown.
"We will continue to update the market as and when appropriate."