Shaftesbury AR 2017 LR

STRATEGIC REPORT ANNUAL REVIEW Shaftesbury Annual Report 2017
Leasing
and occupancy
Sustained demand across our portfolio helped deliver strong leasing results.
Our Thomas Neal’s Warehouse and Central Cross schemes completed in
the year and letting is underway.
Leasing
During the year, we concluded leasing transactions in the wholly-owned
portfolio with a rental value of £31.1 million (2016: £27.8 million). Of this,
commercial transactions totalled £23.8 million (2016: £21.6 million) and
residential lettings and renewals amounted to £7.3 million (2016: £6.2 million).
Rents for commercial uses were, on average, 6.7% above ERV at 30
September 2016.
LEASING ACTIVITY DURING THE YEAR 1
Commercial
£M
Lettings and lease renewals 13.4 +7.7% vs September 2016 ERV
Rent reviews 10.4 +22.6% vs previous rent (equivalent
to 4.2% CAGR over five years)
Residential
23.8 +6.7% vs September 2016 ERV
Lettings and renewals 7.3 -1.6% vs prior rent
Total 31.1
Our share of lettings, lease renewals and rent reviews in the Longmartin joint
venture was £3.9 million (2016: £2.7 million), with commercial rents achieved
broadly in line with ERV at 30 September 2016. Accounting for £3.2 million,
rent reviews delivered average increases of 36.4% compared with previous
rental levels, an equivalent 5-year CAGR of 6.4%. We have now concluded the
majority of this first round of rent reviews following scheme completion in 2011.
EPRA vacancy
At 30 September 2017, EPRA vacancy was 6.0% of ERV, an increase of 4.4%
over the year. The total includes 3.5% in respect of Thomas Neal’s Warehouse
and Central Cross. Excluding these larger schemes, EPRA vacancy was 2.5%,
in-line with our long-term average.
Completed larger schemes
We have created large, prominent retail and restaurant units at our Thomas
Neal’s Warehouse and Central Cross schemes, of which 34% by ERV is now
let or under offer. Larger space requires occupiers to commit to significant
investment in fit-out and substantial rental obligations and we expect letting
periods to be longer for these units than for the smaller space typically we have
to offer. Current macro-economic uncertainties are showing signs of slowing
potential tenants’ decision–making processes. We will be patient in selecting
occupiers which meet our objective of delivering long-term rental growth.
Thomas Neal’s Warehouse
In the heart of Seven Dials, our scheme created a unique 22,800 sq. ft.
flagship retail unit. At 30 September 2017, it accounted for 0.7% of
available-to-let ERV. The space now is under offer to a single occupier.
Central Cross
Located at the eastern gateway to Chinatown, next to Leicester Square
Underground station and a few minutes’ walk from Tottenham Court Road
station, our scheme is well-positioned to benefit from high and growing
footfall.
We have created exceptional, double-height accommodation with five
shops, totalling 34,500 sq. ft., on Charing Cross Road and seven restaurants,
fronting Newport Place and Newport Court, extending to 13,300 sq. ft.
At 30 September 2017, all four of the smaller restaurants (ERV: £0.4 million)
were let or under offer. Subsequently, we have placed one large restaurant
under offer (ERV: £0.3 million). We have ongoing discussions with a number
of parties for the remaining space.
1 Wholly-owned portfolio
See also letting activity by use on pages 42 to 47
40