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By Anita Likus
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- Retail landlord Liberty International PLC (LII.LN) Wednesday said that, while conditions in the property investment and debt markets have improved, short-term pressures on the group's earnings continue.
The company said that, despite welcome signs of improvement in property markets and greater activity in tenant markets, it's still facing short-term pressure from low returns on temporary cash holdings and lower income on short-term re-lettings following a raft of tenant failures last year.
Commercial property landlords have been hit by the recession, as the lack of property financing curbed demand, causing property values to fall. Liberty has also been dealing with vacant space as retailers, squeezed by constrained consumer spending, went into administration or contracted their businesses.
Excluding tenants in administration, occupancy rates for the period from July 1 to Nov. 4 increased to 97.6% from 96.3% in June 30. Capital shopping centers' occupancy improved, as the company relet most of the vacant space left behind by tenants in administration, to 98.9% from 98.3%.
The company opened a new extension of its Welsh shopping center, St.David's in Cardiff, with 70% already rented by area, or 65% by income. It also concluded a GBP290 million debt facility secured on the property, indicating a return of confidence in the debt market. Liberty owns the center in a 50:50 joint venture with U.K.'s largest real estate investment trust Land Securities PLC (LAND.LN).
Liberty’s next refinancing — on its flagship Lakeside Thurrock shopping center in Essex, east of London — is due in the middle of 2011. But Chief Executive David Fischel expects to refinance the sum next year, and has already been approached by lenders. “There is money available for quality,” he has told Dow Jones Newswires. Lakeside Thurrock is valued at GBP877 million.
Net external debt fell to GBP3.1 billion after a GBP274 million capital raise with pro forma debt to assets standing at 51%.
Liberty International shares closed Tuesday at 433 pence, valuing the company at GBP2.67 billion.
-By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; anita.likus@dowjones.com