The West End landlord Shaftesbury has reported a wider first-half loss but is hopeful that a recovery in central London is under way, with its vacancy rate improving.
The company, which owns 600 buildings in Carnaby, Seven Dials and Chinatown, and also parts of Covent Garden, Soho and Fitzrovia in the heart of the capital, said its pretax loss widened to £339m in the six months to 31 March from £288m a year earlier, as rental income declined by a fifth to £49m.
With central London emptied of shoppers and tourists during successive Covid-19 lockdowns, Shaftesbury collected only 43% of rent due from its retail, restaurant, bar and office tenants. It raised £307m from shareholders in November to get through the crisis.
However, vacancy rates improved to 11.3% in the past six weeks from 11.9% on 31 March. The company said almost all hospitality, leisure and retail tenants had reopened, and visitor numbers are back at 45% of pre-pandemic levels across the West End.
Restaurants and bars have reported a strong recovery in trade and bookings, while retail is more mixed, with independent retailers having more success than more mainstream shops.
Shaftesbury expects a gradual return of local workers after 21 June, when the final coronavirus lockdown measures are due to end in England. Nightclubs and music venues will reopen and larger events can resume without limits on crowds under the government’s roadmap.
The company does not expect international travel to recover until later next year, but is betting on a big rise in UK tourists and locals coming to the West End.
Brian Bickell, the chief executive, said: “After more than a year of unprecedented disruption, a revival in the West End’s broad-based economy is now under way. Since the start of reopening on 12 April, we are seeing an encouraging increase in demand for space and lettings and a return of footfall and spending across our locations.
“Forecasts point to a sharp rebound in the UK economy but there remains the risk that the recovery could encounter delays and setbacks in the period ahead.”
Tim Leckie, a European property analyst at JPMorgan Chase, said: “The damage to estimated rental values was done by retail, specifically large unit retail leases along Carnaby Street. Covid-19 is accelerating the downsizing of these units to formats more in demand today. Values have fallen 26.5% in the last year, which largely rebases the asset value and the recovery is under way.”
