FY25 results: resilient operations, valuation drag and a disciplined stance
Town Centre Securities (TCS) has posted a resilient set of FY25 numbers in a tough market. Revenues edged up, underlying operations held their own, and the statutory loss narrowed materially. The flipside is familiar across UK real estate: valuation softness pushed net assets down and nudged leverage up.
Here are the headlines as I see them:
- Gross revenue up 2.3% to £32.7 million; net revenue down 9.2% to £14.9 million as property expenses rose.
- Operating profit before valuation movements of £10.3 million, down 6.4% year on year.
- Statutory loss after tax of £3.4 million (FY24: £7.8 million loss). Loss before tax was £1.1 million.
- EPRA earnings after tax of £1.8 million (FY24: £6.3 million), reflecting a tax credit last year and a tax charge this year. EPRA EPS is 4.2p.
- Like-for-like portfolio valuation down 2.4%.
- EPRA NTA of £109.9 million or 261p per share (FY24: 272p); statutory NAV 266p per share.
- LTV up to 53.1% (FY24: 50.8%). Average borrowing cost 5.2%, with 87.5% fixed.
- Proposed final dividend of 2.5p, taking the year to 5.0p, which is uncovered by EPRA earnings.
| Key FY25 numbers | FY25 | FY24 |
|---|---|---|
| Gross revenue | £32.7 million | £32.0 million |
| Operating profit before valuations | £10.3 million | £11.1 million |
| Statutory loss after tax | £3.4 million | £7.8 million |
| EPRA earnings after tax | £1.8 million | £6.3 million |
| EPRA EPS | 4.2p | 14.0p |
| Like-for-like valuation change | -2.4% | – |
| EPRA NTA per share | 261p | 272p |
| Statutory NAV per share | 266p | 279p |
| Loan-to-value (LTV) | 53.1% | 50.8% |
| Weighted average cost of debt | 5.2% | – |
| Fixed rate debt | 87.5% | – |
| Dividend per share | 5.0p | 8.5p |
| Rent collection | 99.2% | 99.2% |
| Void rate | 7.4% | 8.1% |
| RCF headroom | £24.6 million | £20.4 million |
EPRA earnings, dividend coverage and what it means
EPRA earnings are the property sector’s preferred measure of underlying profit, stripping out non-cash valuation swings. TCS generated £3.0 million before tax and £1.8 million after tax. The step down versus last year is largely tax driven: FY24 included a £2.4 million net tax credit; this year there is a £1.2 million expense.
The full-year dividend of 5.0p is back to a regular cadence, but it is uncovered by EPRA earnings (119% payout). That is a cautious red flag for income purists, albeit the Board is clearly balancing shareholder returns with cash flow and development spend. If earnings recovery continues and valuation pressures ease, coverage could improve. For now, note the gap.
Portfolio valuations: mixed picture, strong asset management
The like-for-like portfolio fell 2.4%, which in today’s market is a fairly modest outward move in yields. Under the bonnet:
- Residential up 6.7% and hotels up 3.0%.
- Offices stabilised and rose 0.7%, with rental growth across the portfolio.
- Out of town retail up 4.6%; broader retail and leisure outside the Merrion Centre improved.
- Merrion Centre (excluding offices) down 7.1% as the internal mall remains tough.
- Car parks down 10.9% in value, reflecting cost inflation and rent pressures.
- Development properties down 14.9%, which is not unusual given discount rates and risk premia.
Operationally, the team continues to execute: 99.2% rent collection, voids down to 7.4%, and portfolio focus where TCS knows the streets – 89% of assets in Leeds and Manchester. The Dishoom pre-let at Vicar Lane is a nice marker for destination F&B demand, and residential lettings have been strong in Glasgow, Manchester and Leeds.
Debt, LTV and liquidity: mostly fixed and extended
Loan-to-value has moved up to 53.1% as values eased and lease liabilities were reassessed under IFRS 16. That is the metric to watch. The mitigants are sensible:
- Average borrowing cost is 5.2% with 87.5% at fixed rates, so limited exposure to base rate volatility.
- £24.6 million of headroom on revolving credit facilities at 30 June 2025. Property values would need to fall 25.8% before that headroom is breached on secured facilities.
- Lloyds RCF extended to June 2027 with an option to extend to 2028; NatWest extended to December 2026; Handelsbanken expires June 2026 and will be addressed in the coming months.
Bottom line: leverage is on the higher side, but maturities are pushed out, cash headroom is improved, and interest rate risk is largely locked down.
Development pipeline: PBSA at Merrion and the Whitehall Riverside opportunity
TCS’s development pipeline remains its key differentiator, with an estimated GDV of over £400 million. Two flagship schemes advanced in the year:
- Merrion Centre – planning secured for 1,039 purpose-built student beds via the redevelopment of Wade House plus a 37-storey tower at the 100MC site. This also brings residential use into the estate for the first time, diversifying income streams.
- Whitehall Riverside – site-wide consent in place, enabling works completed, and discussions with occupiers and contractors ongoing for Z, a next-generation, energy-efficient office building in Leeds.
These are long-term value creators, but also capital intensive. TCS says it will balance progress with maintaining robust finances. That is the right stance.
Segment trends: property, CitiPark and hotel
- Property – Operating profit of £6.0 million, down 4.4%, with valuation movements doing the damage. Active refurbishments, like Town Centre House achieving an EPC A, support leasing and rents.
- CitiPark – Revenue up to £14.0 million (FY24: £13.4 million) and operating profit of £3.8 million, down 8.6% as prior year rates rebates dropped out and costs rose. TCS completed the roll-out of its in-house parking management system across all branches, improving data, customer experience and enforcement synergies.
- ibis Styles Leeds – Income held steady at £3.3 million with high occupancy; operating profit was £0.6 million.
Why it matters for shareholders
There is a clear reset story here: tighter operations, lower variable-rate debt, and a more diverse portfolio centered on markets TCS knows best. The share price continues to trade at a significant discount to NTA, and at 30 June 2025 it was 135.5p against statutory NAV of 266p per share. If valuations stabilise and developments progress, that discount could narrow.
Counterpoints: the dividend is uncovered by EPRA earnings, LTV is elevated at 53.1%, and car park and development valuations were marked down. The next 12 months are about execution and capital discipline.
My take: cautiously positive with eyes on leverage and execution
On balance, this is a pragmatic, tidy set of results in a market that is still price sensitive to yields. I like the operational resilience – 99%+ rent collection and lower voids – and the fact 87.5% of debt is fixed at a 5.2% average cost. The development optionality at Merrion and Whitehall
