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Liberty announces a demerger as it reports a disappointing 2009 performance with a 38% fall in NAV per share
Liberty International Plc, the retail REIT and Britain's biggest mall owner, today announced its intention to separate into two businesses, Capital Shopping Centres and Capital & Counties, in a bid to enhance shareholder value. Capital & Counties is to hold the London assets and Capital Shopping Centres the rest of the portfolio.
Liberty also reported that it's net rental income for 2009 was down 3% to £371 million and that as a result of a valuation deficit of £768 million ( down from £2057 million in 2008) and a valuation gain on swaps of £417 million a pre-tax loss of £329 million has been made (£2,662 million p-t loss 2008)
The net assets of the group have increased from £2798 million in 2008 to £2946 million, but as the group made 2 share placings during the year to raise a total of £866 million, with the reult that NAV per share was diluted 38% from 745p to 464p.
Patrick Burgess, Chairman of Liberty International, commented:
“The Group is in a substantially stronger financial position than twelve months ago with the loan to value ratio reduced from 58% to 51% and with cash balances of £583 million and undrawn committed facilities of £248 million. After two difficult years in the UK property industry, the Group has considerable recovery prospects. The Directors therefore face the future with a measure of confidence.
The Capital & Counties business has become an attractive central London focused business concentrated on three landmark estates including Covent Garden and Earls Court & Olympia. This business has been almost entirely created in the last five years with the active involvement of its current management team through much of that period.
Capital Shopping Centres is a market leader in the UK regional shopping centre business embracing the highest quality centres with a senior management team whose worth has been proven through several economic cycles. Retail trade in the UK continues to gravitate towards the strongest destinations, the supply pipeline of new retail space has sharply diminished, and this is greatly to the benefit of existing centres.
The Board believes that the demerger announced today into two distinct focused businesses will enable Capital Shopping Centres and Capital & Counties each to achieve their full potential over a period of time”.
Occupancy levels at Capital Shopping Centres’ UK regional shopping centres improved to 97.8% (31 December 2008 – 93.6%). This is in spite of the 1 million sq. ft. expansion of St David’s, Cardiff opened October 2009 now over 70% committed by income. In Covent Garden, London, occupancy increased to 99% (31 December 2008 – 97%)
Following the demerger, current Liberty International CEO David Fischel will become chief executive of the Capital Shopping Centres Group, and Ian Hawksworth will become CEO of London-focussed Capital & Counties Properties.
The Gordon Family, whose combined interest in Liberty is 14.8%, has consented to the plan.
Underlying earnings, which excludes valuations, was £91 million against £105 million in the previous year, behind the consensus forecast of £102.96 million from 12 analysts.
Liberty, whose main shareholders also include top U.S. mall owner Simon Property, announced a full-year dividend of 16.5 pence per share, in line with guidance.
Liberty's proposed split signals a watershed in Britain's young REIT sector, which have long debated the merits of their mostly diversified portfolios, over specialisation seen in the more matured U.S. and Australia markets.
Liberty also reported that it's net rental income for 2009 was down 3% to £371 million and that as a result of a valuation deficit of £768 million ( down from £2057 million in 2008) and a valuation gain on swaps of £417 million a pre-tax loss of £329 million has been made (£2,662 million p-t loss 2008)
The net assets of the group have increased from £2798 million in 2008 to £2946 million, but as the group made 2 share placings during the year to raise a total of £866 million, with the reult that NAV per share was diluted 38% from 745p to 464p.
Patrick Burgess, Chairman of Liberty International, commented:
“The Group is in a substantially stronger financial position than twelve months ago with the loan to value ratio reduced from 58% to 51% and with cash balances of £583 million and undrawn committed facilities of £248 million. After two difficult years in the UK property industry, the Group has considerable recovery prospects. The Directors therefore face the future with a measure of confidence.
The Capital & Counties business has become an attractive central London focused business concentrated on three landmark estates including Covent Garden and Earls Court & Olympia. This business has been almost entirely created in the last five years with the active involvement of its current management team through much of that period.
Capital Shopping Centres is a market leader in the UK regional shopping centre business embracing the highest quality centres with a senior management team whose worth has been proven through several economic cycles. Retail trade in the UK continues to gravitate towards the strongest destinations, the supply pipeline of new retail space has sharply diminished, and this is greatly to the benefit of existing centres.
The Board believes that the demerger announced today into two distinct focused businesses will enable Capital Shopping Centres and Capital & Counties each to achieve their full potential over a period of time”.
Occupancy levels at Capital Shopping Centres’ UK regional shopping centres improved to 97.8% (31 December 2008 – 93.6%). This is in spite of the 1 million sq. ft. expansion of St David’s, Cardiff opened October 2009 now over 70% committed by income. In Covent Garden, London, occupancy increased to 99% (31 December 2008 – 97%)
Following the demerger, current Liberty International CEO David Fischel will become chief executive of the Capital Shopping Centres Group, and Ian Hawksworth will become CEO of London-focussed Capital & Counties Properties.
The Gordon Family, whose combined interest in Liberty is 14.8%, has consented to the plan.
Underlying earnings, which excludes valuations, was £91 million against £105 million in the previous year, behind the consensus forecast of £102.96 million from 12 analysts.
Liberty, whose main shareholders also include top U.S. mall owner Simon Property, announced a full-year dividend of 16.5 pence per share, in line with guidance.
Liberty's proposed split signals a watershed in Britain's young REIT sector, which have long debated the merits of their mostly diversified portfolios, over specialisation seen in the more matured U.S. and Australia markets.
Tue, 9th Mar 2010