UK-Based property group Liberty International, which has a significant South African shareholding, yesterday reported that rental income rose 4% in the nine months to September, to £281,3m from £270,5m last year.
Despite tough trading conditions in the UK’s commercial property market, occupancy at subsidiary Capital Shopping Centre’s UK regional shopping centres changed only slightly from 98,7% to 97,9%. This excluded units occupied by tenants in administration and units not yet relet or under offer.
But the group said it expected this month to be a really hard one for its retail property business due to the financial turmoil.
The group reported a pretax loss for the interim period of £1059m after including a £1083m deficit on property revaluations and £26m deficit on the valuation of derivative financial instruments. Net asset value per share fell 20,5% from 1264p last year to 975p this year.
It said the results also reflected the seasonally weak summer period at Earl’s Court and Olympia properties and the once-off £2,5m cost of outsourcing the group’s IT infrastructure as announced when posting half-year results this year.
Liberty International chairman Patrick Burgemann said yesterday the third quarter and the period since the end of September “will long be remembered for the extreme turbulence in financial markets, which has had a marked impact on the UK commercial property sector”. The scarcity value and strong competitive position of the UK regional shopping centres was unlikely to be further challenged for a long time.
“One favourable consequence of the difficult property market conditions has been a sharp reduction in the potential supply pipeline of UK shopping centre space with projects which have not already started unlikely now to be opening for some years, given the time scales involved in bringing major shopping centre projects to fruition.”
The group said it made good reletting progress with 44 units relet or under offer, but tenants that went into administration contributed to an increase in nonrecoverable outgoings of £3,7m.
This included £1,1m on empty rates, reflecting the adverse conditions in both property and debt markets. The group said it would be taking active steps to minimise further capital expenditure commitments and reduce administrative expenses.
Liberty International CE David Fischel said that in the case of the administrative expenses some steps to reduce the additional costs had been taken, and benefits were expected to kick in next year.
Fischel said the group was working on two projects, Eldon Square in Newcastle upon Tyne and St Davids in Cardiff. Work on both projects had already begun.
Liberty International’s share price was up 0,09% at R114,70 on the JSE yesterday.
