Reits suffer further blow as Liberty 'takes a £30m hit'

Published on Monday 22 June 2009 21:10

LIBERTY International, the company that owns Braehead shopping centre, has suffered some of the worst rates of tenant failure and biggest losses from empty shops in the UK retail sector, the City was warned yesterday.

Analysts estimated that the FTSE 100 real estate investment trust (reit) which owns Capital Shopping Centres (CSC) – which includes the Braehead mall – has lost 30 million in the last quarter of 2008 and the first quarter of 2009.

This figure, from Evolution Securities, indicated an acceleration of the net rental losses of 16m CSC announced in its annual results for 2008. Overall in 2008, CSC Group's loss before tax hit 1,551.1m compared with the previous year's loss of 166.8m.

Yesterday's grim picture of performance of Liberty – which includes Braehead and indoor ski venue Xscape and London's Earls Court exhibition centre in it porfolio – was a new blow for the reit sector.

Liberty , which owns nine of the top 30 regional shopping centres in the UK, has some of the highest voids in the sector, according to a report yesterday by Evolution.

The stockbroker also warned that Liberty was unlikely to meet its promised dividend to shareholders as profits would continue to decline sharply in 2009 and 2010. Liberty halved its dividend in 2008 to 16.5p and said it intended to pay this or higher in future. But Evolution said the group would only be able to afford a 12p dividend – 27 per cent lower than the property trust estimated.

The analysts said Liberty was its "least favoured" among the four FTSE 100 reits in the UK. The others are British Land, Land Securities and Hammerson.

Evolution said that, despite sharp falls in the four reit's market capital, the prices reflected "fair value" for the companies and their property portfolios.

Harry Stokes, property equities analyst for Evolution, admitted trying to forecast the value of property was "wandering into the realms of guesswork".

Shares in Liberty have fallen in value almost 53 per cent during the year and 70 per cent since its peak in November 2006. The other three reits have also seen their market shares collapse. British Land, which has stock in the Bon Accord shopping centre in Aberdeen, has seen the value of shares fall 73 per cent since a December 2006 peak.

Land Securities, owner of the Centre in Livingston and Glasgow's Buchanan Galleries has seen the value of its shares fall by 78 per cent since its peak, also in December 2006.

Liberty International was last night unavailable to comment.