New Frontier signals extent of shopping centre woes
Mauritius-based shopping centre owner New Frontier Properties has reported a loan-to-value ratio of 90% in the six months to 28 February, after asset values plummeted.
The vehicle, backed by South African businessman Sisa Ngebulana, bought Coopers Square in Burton upon Trent, the Cleveland Centre in Middlesbrough and Houndshill Shopping Centre in Blackpool for £284m in 2015.
But the year-on-year value of the landlord’s three shopping centres fell by 34.2% in the six months to 28 February to £181m, according to its most recent trading update.
Mauritius-based shopping centre owner New Frontier Properties has reported a loan-to-value ratio of 90% in the six months to 28 February, after asset values plummeted.
The vehicle, backed by South African businessman Sisa Ngebulana, bought Coopers Square in Burton upon Trent, the Cleveland Centre in Middlesbrough and Houndshill Shopping Centre in Blackpool for £284m in 2015.
But the year-on-year value of the landlord’s three shopping centres fell by 34.2% in the six months to 28 February to £181m, according to its most recent trading update.
Its LTV, excluding borrowings from Ngebulana’s Rebosis Property Fund, rocketed to 90%, up from 60.3% in the first half of the previous year.
EPRA net asset value per share plummeted by 89.6% in the six months to just 7p, from 67p during the same period in 2017.
Net property income reduced by 13.8% year-on-year, to £6.04m. The weighted average lease term to expiry is 9.02 years.
Boots, New Look and Debenhams are some of its largest occupiers by income, with the department store accounting for 3.93% of New Frontier’s rent roll.
Looking ahead, the landlord said ongoing Brexit uncertainty, company voluntary arrangements and tenant defaults may continue to hamper trading.
The company’s going-concern status also relies on whether its lenders will continue to fund its corporate costs.
New Frontier breached its banking covenants on loans provided by two lenders, HSBC and Deutsche Pfandbriefbank, in December.
At the time it cited CVAs, receiverships and difficult trading conditions among the primary factors leading to the circa 30% drop in valuations.
In its latest update, the landlord said PBB was currently supporting the loan facility for its Blackpool centre, which matures in July 2020, but is considering “all options”.
It also highlighted “positive discussions” with HSBC on its facility for the Burton and Middlesbrough centres, which matures in 2022. The bank is also reviewing options for the assets.
Cash flow after operating expenses remains in the hands of the banks.
Last year, New Frontier sold a logistics warehouse in Dublin, valued at £8m, to pay down some of its debt.
The company is led by chief executive Mike Riley, formerly joint chief executive of Local Shopping REIT.
