Property sector updates
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Three property companies have laid bare the impact of coronavirus on the UK market, with the pandemic hitting valuations and customer interest.
Property companies across the UK have been hit hard by both the virus and the government’s response. Commercial tenants have downsized the space they need and work on construction sites has been delayed.
London landlord Great Portland Estates said it had written down the value of its portfolio by 6 per cent overall. The value of its retail properties has been cut by 18 per cent as vacancies in central London have risen and rents dropped.
“It is clear that the impact of the Covid crisis will persist for longer than we had hoped,” said chief executive Toby Courtauld, announcing first-half results.
“With unemployment rising, albeit from a low level, we should expect rents and capital values in London to fall further,” he said.
Great Portland has collected 80 per cent of the rent that was due for September. Collection rates were much higher for offices than for retail and hospitality locations.
The company’s shares fell 2 per cent in early trading on Wednesday.
Workspace, the flexible office provider, has also written down the value of its portfolio. In its half-year results it said that its properties were worth £2.5bn, 5 per cent less than at the end of March.
Occupancy and rents are down, and the board has deferred a decision on the dividend until the full-year results. Workspace offered most of its customers a 50 per cent discount on their rents in the first quarter.
Chief executive Graham Clemett said that the pandemic had “accelerated fundamental changes to the role and requirements of the office”. Businesses, he said, would need to be agile and would expect the same from their office providers.
Workspace shares fell 1.3 per cent in early trading on Wednesday and were down 38 per cent for the year to date.
McCarthy & Stone, the retirement housebuilder that has accepted a £630m offer from private equity company Lone Star, is also feeling the pain.
In a full-year trading update, it said it had sold 832 units, well down on the 2,402 completions in 2019. It added that current trading was “increasingly affected” by rising infection rates and lockdown measures.
“Sales have remained subdued as the behaviour of our customer base, which has an average age at the time of purchase of 79, has been more cautious than the broader population due to the risks associated with Covid-19,” the company said in a statement.
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