LXB Retail Properties Plc Trading Update - Further Guidance (0585U)
October 19 2017 - 4:00AM
UK Regulatory
TIDMLXB
RNS Number : 0585U
LXB Retail Properties Plc
19 October 2017
19 October 2017
LXB Retail Properties Plc
(the "Company" or the "Group")
Trading Update - Further Guidance
LXB Retail Properties Plc, the Jersey resident closed-ended real
estate investment company focused on edge of town and out of town
retail assets, provides this trading update following the
announcement on 6 October 2017 which promised a more detailed
assessment of NAV impact within 14 days. The Board now provides
more detail on the issues which lead to a re-appraisal of ultimate
NAV. However, as explained below, the Board is not yet in a
position to refine its guidance.
There are two main drivers of the re-assessment; Stafford
Riverside and Rushden Lakes.
Stafford Riverside
At Stafford, this 102,000 sq ft investment has been offered for
sale in line with the mandate from shareholders. Whilst no
transaction has yet been agreed, it is clear from discussions with
potential purchasers that the recent hardening of sentiment towards
the retail sector is likely to mean that the value realised from
this investment will be below the Board's expectations when it
issued NAV guidance on 14 June 2017.
Rushden Lakes
At Rushden Lakes, the toughening of the lettings market is
certainly having an impact on the terms which can be achieved when
letting new space to retailers and restaurant operators.
Notwithstanding that, the Group continues to achieve success with a
number of lettings signed recently. More detail on this will be
provided with the Full Year Results Announcement later in November
2017. However, the more significant issue impacting NAV at Rushden
Lakes relates to recently notified significant potential cost
over-runs in connection with the highways works associated with
this major new retail and leisure destination.
Highways England acts on behalf of the Secretary of State for
Transport as the highway authority for the Strategic Road Network,
which includes the A45 trunk road at Rushden. Any changes to this
network require an agreement (under section 278 of the Highways Act
1980) in addition to agreements needed for works to local roads
controlled by Northamptonshire County Council.
The planning permission for the Rushden Lakes scheme required
the Group to deliver a range of highways improvement works
including significant amendments to the A45 roundabout and slip
roads as well as an overbridge. As the developer, LXB contracted
with Highways England under its standard 'single agreement' process
for Highways England to undertake the work as project manager using
its own contractors. Consequently, LXB had no contractual role in
the contractor's appointment or performance. This is a normal
approach with Highways England required to provide access to all
reasonable information and ensure adequate project management and
supervision of its contractor so as to ensure an efficient
outcome.
At the end of September 2017, Highways England advised the Group
of a number of unbudgeted cost items which it considers are
recoverable from LXB. These include several matters where the costs
are not yet quantified or explained. Having analysed the initial
Highways England claim, the Group's lawyers have advised Highways
England formally that many of their claims are contested and that
LXB does not consider it has any liability for them. A meeting with
the key Highways England personnel was requested, but it has not
been possible to arrange that until later this week.
Even though there is uncertainty about the outcome of the
Highways England claim, the Board has taken the view that the
potential implications, particularly in conjunction with the
indicative pricing relating to the Stafford Riverside investment,
were such that shareholders should be advised of the Board's
revised view on potential NAV. It is likely that the discussions
with Highways England will take some time to resolve. The Board is
scheduled to meet in the second half of November 2017 and, as well
as considering the Results for the year to 30 September 2017, it
will receive an update on the Highways England situation.
Commenting on the position, Phil Wrigley Chairman of LXB Retail
Properties Plc, said:
"Of course it was disappointing to have to announce a possible
reduction in NAV, however the Board has always committed to an open
dialogue with shareholders about its views on value. Having
returned virtually the whole of the capital raised by its IPO and
subsequent share issues (net of issue costs and shares bought back
for cancellation) the Group now has a relatively modest balance
sheet so any adjustment in the anticipated value of any of our
remaining investments inevitably has a greater relative impact on
NAV. In the circumstances, the Board considers it is even more
important to maintain that policy of full openness about
anticipated value now, as we continue to prepare detailed proposals
for shareholders to consider at a forthcoming Extraordinary General
Meeting.
"A further RNS update will be made as soon as it is appropriate,
although shareholders will understand that there can only be
limited disclosure whilst commercially sensitive matters such as
these remain under discussion and the preciseness of the position
is still unclear."
For further information please contact:
LXB Adviser LLP Tel: 020 7432 7900
Tim Walton, CEO
Brendan O'Grady, FD
J.P. Morgan Cazenove (NOMAD) Tel: 020 7742 4000
Bronson Albery/Paul Hewlett
Buchanan Tel: 020 7466 5000
Charles Ryland/Victoria Hayns
This information is provided by RNS
The company news service from the London Stock Exchange
END
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