News Column

LXB Retail Properties Laments Challenging Market As Profit Creeps Up

June 18, 2014

Anthony Tshibangu

LONDON (Alliance News) - LXB Retail Properties PLC Wednesday said the market remains challenging for prospective tenants, as it reported a slight increase in profit for the first half.

The Jersey-based closed-ended real estate investment trust posted pretax profit of GBP11.8 million for the six months ended March 31, up slightly from GBP11.1 million a year earlier. The company made a GBP12.8 million revaluation gain compared with GBP10.3 million a year earlier. However profit on the sale of investment properties fell sharply to GBP742,498 from GBP5.0 million a year earlier.

Gross revenue, which incorporates rental income, rose to GBP5.7 million from GBP2.5 million. This was despite gross rental income falling from 1.2 million from GBP2.5 million a year earlier. LXB benefited from GBP4.5 million in revenue derived from an institutional funding agreement, relating to the group's contractual obligations regarding the construction of retail complex development in Greenwich, London, which was disposed of during the period.

LXB said its priorities for the period were to gain further planning permissions, sign more tenants, and move into the construction phase for our investment properties. Although the company had successes and made progress on all fronts given the current retail and planning environment, it encountered some challenges.

The company said it has planning permission for a foodstore at the Old Gasworks in Sutton, London, and Brocklebank Retail Park at Greenwich which has encouraged more retailers to commit to leases.

LXB said that if all its outstanding planning applications and current lettings under offer are signed, it will have let 67% of its ground floor retail space and achieved 70% of its estimated annual rent roll.

The firm said this "still leaves much to be done" but it is pleased to have attracted a number of popular high-street fashion retailers, such as Primark and H&M.

However, the company said it is having to meet the challenges arising from the "structural changes taking place in retail today". LXB said tenants remain cautious and concerns persist about store size, lease lengths and fitting out costs.

"Our lettings achievements show we have the right locations, although we do sometimes have to offer attractive incentive packages before retailers will commit to institutional grade leases," LXB said.

Overall, LXB said its net asset value per share rose to 120.98 pence from 115.93 pence.

LXB shares were quoted up 1.9% at 123.24 pence Wednesday morning.

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Source: Alliance News

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