SHAFTESBURY 2021 FULL YEAR RESULTS

Confidence, footfall, trading recovering

Rebound in occupier demand driving vacancy down towards pre-pandemic levels;

Valuation recovery in second half

Shaftesbury PLC, the Real Estate Investment Trust that owns a 16-acre portfolio in the heart of London's West End, today announces its results for the year ended 30 September 2021.

Brian Bickell, Chief Executive, commented:

""Freedom Day" on 19 July marked the first time in 17 months that our 600+ hospitality and retail occupiers, and businesses across the West End, could begin to trade normally. What followed has been a remarkable bounce back in activity, as domestic visitors and workers returned, with footfall and spending in our villages well on the way to returning to, or in some cases already exceeding, their pre-pandemic levels.

Our response to the economic and social disruption caused by the pandemic has been to support our occupiers and community and to work with our fellow West End stakeholders. Its success has been rewarded by the speedy recovery in footfall and trading across our villages, which in turn has enhanced their appeal to new businesses and residents and restored our occupancy levels. It is also an endorsement of our credentials as a long-term, responsible, supportive landlord and partner.

There has been great progress on Shaftesbury's road to recovery in recent months. Although there is still further to travel before certainty and confidence fully returns, we believe that the combination of our exceptional and adaptable portfolio, and our culture, people and relationships will deliver a sustained return to growth and prosperity, and ensure we live up to the expectations of our shareholders and other stakeholders, for many years to come."

Overview

  • Pandemic restrictions had a material impact on results for the financial year, but trends turning positive over the second half. Valuation recovery in the second half as pandemic uncertainties began to recede.
  • From 19 July 2021, occupiers were able to trade at full capacity and offices reopened, following over nine months of disruption, lockdowns and trading restrictions.
  • Sustained recovery in footfall; weekends currently back to 2019 levels and weekdays at c.80%.
  • Confidence and domestic spending recovering; led by hospitality and leisure but retail catching up.
  • Sustained occupier demand across all uses; vacancy rapidly returning to pre-pandemic levels.
  • Occupier support strategy successful in maintaining occupancy across hospitality, retail and leisure space through the disruption. Support now only being given on an exceptional, case-by-case basis.
  • Resumption of progressive dividend policy; recommending final dividend: 4.0p per share
  • Net zero carbon commitment: 2030; carbon-neutral in our operations: 2025.
  • Positioning for the future: preparing for a faster-changing environment including adding specialist skills to our team and grow our next generation talent.

Significant improvement in occupier interest across all uses and improving rent collection

  • Leasing transactions with a rental value of £33.9m completed during the year (2020: £23.6m); c.60% by rental value concluded in the second half.
    • Full year commercial lettings and renewals totalled £20.6m, concluded on average 8.0% below 30.9.2020 ERV; H2 £12.7m, concluded on average 0.7% above 31.3.2021 ERV.
    • Commercial rent reviews (£3.4m) concluded on average 10.2% above previous rents.

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    • 373 residential lettings (£9.9m), on average 7.8% below previous rents.
  • Momentum continued with £5.4m of lettings and renewals in the two months since 30 September 2021.
  • EPRA vacancy decreased across all uses, standing at 6.0% of ERV at 30 September 2021, falling to 4.9% since year end, trending towards our long-termpre-Covid average (Peak 31.3.2021 11.9%).
  • Available-to-letat 30.9.2021: 2.9% of ERV across 53,000 sq. ft.
    • No apartments available at 30 September 2021 (30.9.2020: 133)
  • Space under offer: 3.1%, falling to 1.7% since year end.
  • Sustained recovery in rent collection since all restrictions lifted in July.
    • 52% of contracted rent collected in the first nine months of the year, rising to 75% in the final quarter as restrictions were removed fully and occupier support tapered.
    • 80% of October rent collected to date; further collections expected.
    • Rental support now ceased other than on exceptional case-by-case basis.
  • We saw a swift rebound in demand for our exceptionally busy, central West End space as confidence grew, with £33.9m of letting activity in the year and another £6.3m since 30 September.

Pandemic restrictions had a material impact on results for the financial year, but trends turning positive in the second half

  • Net property income down 12.9% to £64.7m (2020: £74.3m) due to occupier support, reduced rent collections and increased vacancy, particularly in the first half of the financial year:
    • 8.5% like-for-like decrease in rental income.
    • Charges for expected credit losses and impairments: £17.7m (2020: £21.9m).
    • Increased vacancy-related costs including business rates and lower service charge recoveries, higher letting costs reflecting high volume of leasing transactions, additional costs due to pandemic-related measures across our villages.
    • Reduction in vacancy and costs, and improving rent collection and service charge recoveries, together will contribute to growth in net property income in the coming year.
  • Increase in administrative expenses largely due to employee costs, including additional headcount and charges for variable remuneration. Prior year costs were lower following the Board's waiver of fees and remuneration for four months, and significantly reduced bonus charges.
  • Loss after tax: £194.9m (2020: loss of £699.5m). Improvement primarily due to a lower revaluation deficit in the current year.
  • EPRA earnings1: £13.3m, down 54.8% (2020: £29.4m).
  • EPRA NTA1: £6.19, down 15.0% (2020 as restated3: £7.28) due to revaluation deficits and the equity raise in November 2020.
  • Resumption of our progressive dividend policy:
    • Recommended final dividend: 4.0p (2020: nil).
    • Total dividend this year: 6.4p. including interim dividend (2.4p) paid to fulfil our 2020 PID obligations under REIT legislation.
    • Dividends will track growth in net property income and earnings over time.

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Wholly-owned portfolio valuation: £3.0bn; full year like-for-like decrease 5.4% (H1: -10.1%; H2: +5.2%)

  • First half valuation decrease largely due to increased yields and reduced ERVs for retail and hospitality uses.
  • Second half valuation increase: rental values stabilising, valuation yields tightening and reduction in the valuer's estimate of potential short-term income loss from occupier support, reflecting improving operating conditions.
  • Valuation movements4 in the year:
    • Hospitality and leisure -6.0% (H1: -11.0%; H2 +5.6%).
    • Retail -13.3% (H1: -18.2%; H2: +6.0%).
    • Offices +0.5% (H1: -3.7%; H2 +4.3%).
    • Residential +4.4% (H1: +0.5%; H2: +3.9%).
  • Equivalent yield: 3.92% (30.9.20: 3.95%; 31.3.21: 4.1%).
  • Portfolio ERV down 6.4%4 to £131.7m (30.9.20: £140.3m), but stable in the second half-year.

Longmartin joint venture: Valuation5: £164.5m; full year like-for-like decline 6.2% (H1: -6.4%; H2: 0.2%)

  • Equivalent yield 4.0% (2020: 4.1%).
  • ERV decline4 of 6.9%, of which 6.3% occurred in the first half.
  • Retail valuation decline 24.8%; hospitality and leisure up 4.9%, offices down 2.2%, residential unchanged.
  • Retail performance driven by large shops on Long Acre where rental tones were down 22.2% and are now 65% below their peak in 2017.

Portfolio investment: adapting and improving buildings; core acquisitions

  • Continue to adapt and repurpose buildings, enhance environmental performance and improve long-term income prospects:
    • Redevelopment and refurbishment schemes across 170,000 sq. ft. during the year. Capital expenditure in the period: £37.4m.
    • ERV of space under refurbishment: £11.8m, 8.9% of portfolio ERV (2020: 10.1%).
  • 72 Broadwick Street (ERV: £5.6m, 4.2% of portfolio ERV):
    • Hospitality and retail space on lower floors (ERV: £0.5m) handed over in the year and both units now under offer.
    • Good progress being made on upper floors; completion in phases from early next year.
    • Pre-let53% of remaining commercial space, by ERV.
    • Occupier interest in two thirds of the office accommodation.
  • Acquired five buildings for £21.1m in Covent Garden and Soho.
  • Disposal of non-core asset in April for £5.3m. Since year end, contracted to sell another building for £7.0m, 13.8% above valuation at 30 September 2021. Further disposals being considered from limited pool of non-core assets.

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Commitment to net zero carbon by 2030

  • Net zero carbon strategy and action plan launched earlier this month:
    • Carbon neutral for our own emissions: 2025.
    • Net zero carbon across the business: 2030.
    • Roadmap sets out action plan; key focus will be working with occupiers to reduce their environmental impacts of their businesses.
    • With rolling programme of incremental improvements across the portfolio, currently do not expect material increase in annual capital spend.

Strong financial base: financial capacity to weather further disruption and well positioned to take advantage of investment opportunities

  • November 2020 equity raise strengthened our financial base and reduced finance risks.
  • Available resources £311.3m; capital commitments: £18.8m.
  • LTV1,6: 24.9% (2020, pro-forma for equity raise: 22.1%); increase largely due to property valuation decline.
  • Weighted average maturity of debt facilities: 8.0 years; earliest maturity: £100m facility in February 2023 and refinancing discussions planned for coming months.

Statement of Comprehensive Income

2021

2020

Reported results

Net property income

£m

64.7

74.3

Loss after tax

£m

(194.9)

(699.5)

Basic earnings per share3

Pence

(52.0)

(222.7)

Interim dividend to fulfil 2020 PID obligations

Pence

2.4

Final dividend for the year

Pence

4.0

-

Total dividends for the year

Pence

6.4

-

EPRA results1

Earnings

£m

13.3

29.4

Earnings per share3

Pence

3.5

9.4

Balance Sheet

Net assets

£m

2,373

2,281

EPRA1

EPRA NTA

£m

2,382

2,290

EPRA NTA per share3

£

6.19

7.28

Total Accounting Return3

%

(14.6)%

(23.3)%

  1. Alternative performance measure ("APM"). The Group uses a number of measures to assess and explain its performance, some of which are considered to be APMs as they are not defined under IFRS. See page 51.
  2. Covid-adjustedEPRA (loss)/earnings is a newly introduced APM which considers EPRA earnings "as if" the cost of pandemic-related rent waivers had been recognised immediately in the Income Statement rather than spread over the life of each lease.
  3. The 2020 comparative per share data has been adjusted for the bonus element inherent in the equity raise in November 2020
  4. Like-for-like
  5. Our 50% share
  6. Based on net debt

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For further information:

Shaftesbury PLC 020 7333 8118

Brian Bickell, Chief Executive

Chris Ward, Chief Financial Officer

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

See Glossary of terms on pages 64 to 67.

RMS Partners 020 3735 6551

Simon Courtenay 07958 754273

MHP Communications 020 3128 8100

Oliver Hughes 020 3128 8622

Rachel Farrington 020 3128 8613

The person responsible for arranging the release of this announcement is Desna Martin, Company Secretary.

There will be a presentation to analysts at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS at 9.30 am on Tuesday 30 November 2021.

The presentation can also be accessed live via webcast or conference call. The live webcast will be available via https://brrmedia.news/SHB_FY21or the Group's website www.shaftesbury.co.uk. A recording of the webcast will be available via these links later in the day. Conference call: In order to join via phone at 09:30am, please dial in 5-10 minutes before the start time on +44 (0)330 336 9434 and quote the confirmation code 2580105. The presentation document is available on the Group's website.

Bondholders

For bondholders, there will be a credit update conference call at 10.30 pm on Wednesday 1 December 2021. Those wishing to participate in the call should obtain an access code ahead of the call by contacting Stuart Bell on 020 3542 3921 or stuart.bell@idcm.eu.com.

Notes for Editors

Shaftesbury is a Real Estate Investment Trust which invests exclusively in the heart of of London's West End. Focused on food, beverage, retail and leisure, our portfolio is clustered mainly in Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in East and West Covent Garden, Soho and Fitzrovia.

Extending to 16 acres, the portfolio comprises 608 restaurants, cafés, pubs and shops, extending to 1.1 million sq. ft., 0.4 million sq. ft. of offices and 633 apartments. All our properties are close to the main West End Underground stations, and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street.

In addition, we have a 50% interest in the Longmartin joint venture, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our purpose

Our purpose is to contribute to the success of London's West End by curating lively and thriving villages where people live, work and visit. Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. We have an experienced and innovative management team focused on delivering our long-term strategic objectives.

Our values

We have five core values that are fundamental to our behaviour, decision making and the delivery both of our purpose and strategic objectives: being human in how we operate, original in how we nurture talent and think, community minded in our approach to the West End, being responsible and long term in our approach to everything.

Our approach to sustainability

Our sustainability strategy encompasses our long-established approach of reducing the environmental impact of our operations through refurbishment, change of use and reconfiguration, working with, and supporting our local community, and using our knowledge and experience to influence and motivate, to achieve positive outcomes.

Forward-looking statements

This document, the latest Annual Report and Shaftesbury's website may contain certain "forward-looking statements" with respect to Shaftesbury PLC (the Company) and the Group's financial condition, results of its operations and business, and certain plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which the Group operates. Forward-looking statements are

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Shaftesbury plc published this content on 30 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2021 07:10:13 UTC.