“By forcing the complete closure of theatre land, and the mothballing of offices across London, the pandemic unfolded as a brutal drama for Covent Garden and Soho landlord Shaftesbury plc (LON:SHB).
[soros]Q1 2021 hedge fund letters, conferences and more
Losses In REITs
Losses for the half year widened at the real estate investment trust to £338.5 million, compared to £287.6 million a year earlier, when the shock of the pandemic first seeped into the system.
Once teeming streets have been largely deserted, with only limited respite as lockdowns eased given the absence of tourists, office workers and theatre goers from central London. The Trust’s core business is non-essential retail, bars and restaurants which have been forced to close their doors for months at a time. Some have shut up shop altogether, and rent payments have clearly been difficult to meet for others, leading to a 19.4% like for like fall in rental income for Shaftesbury.
As venues went out of business, and empty space in the West End has increased, the valuation of its portfolio has again shrunk, falling 10.1% to £2.6 billion.
But the curtain is rising slowly on a brighter performance since the big re-opening of retail and hospitality. New tenants are slowly coming forward, with the estimated rental value of vacant properties in the portfolio falling to 11.3% by mid-April from 11.9% at the end of March. Deals on 47 lettings and renewals on properties have been struck since March 31st, with a rental value of £2.1 million.
Shaftesbury’s Al Fresco Dining Revolution
Shaftesbury has also worked with councils to encourage the al fresco dining revolution, which is rippling through the city, which could prove a positive long-term benefit if given the right support. Adjusting to the new normal will still come as a huge challenge, though Shaftesbury says flexibility built into its portfolio will help it innovate and change buildings to suit demands. This adaptability and nimble attitude to meet evolving business needs should stand Shaftesbury in good stead as the economy recovers.
The re-opening of West End productions with more shows set to start over the coming weeks will provide a much-needed boost. However, many producers are waiting for the final phase out of lockdown at the end of June before premiering plays and musicals, and it’s feared some venues may stay closed for the long term.
With tourist trade and office worker trade also limited, it’s likely to take a long time before its shocking pandemic performance is reduced to a few forgotten lines.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
About us
Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
