Final results for the year ended 30 June 2026

Earnings improved and voids fell, but leverage rose as TCS invested and property values slipped.

What the company is saying

Town Centre Securities PLC, led by Chairman and Chief Executive Edward Ziff, frames the year as one of stability and resilience despite macroeconomic volatility, citing the US/Iran conflict and rising UK operating costs as headwinds. The company highlights a 64% rise in EPRA earnings after tax to £2.9m and improved operational metrics, including a void rate drop to 4.9% and rent collection above 99%. Management emphasizes continued asset management, new investments in London retail and a US multi-family fund, and progress on development projects like the 1,039-bed Merrion Centre student scheme. The narrative stresses a conservative, long-term approach, with a focus on asset recycling and maintaining dividends at 5.0p per share (72.1% of EPRA earnings). The tone is cautious but confident, acknowledging both the improved earnings and the increased loan-to-value ratio, which rose to 55.5% due to new investments and property value declines.

What the data suggests

The statutory loss after tax narrowed to £1.4m from £3.4m, and statutory loss per share improved to 3.2p from 8.2p, driven by lower valuation losses and impairments of £3.7m. EPRA earnings before tax increased to £3.3m (from £2.9m), and EPRA earnings after tax rose 64% to £2.9m, with EPRA earnings per share up to 6.9p from 4.2p. The like-for-like portfolio valuation fell 1.5%, a smaller decline than the prior year's 2.4%. Net assets decreased to £108.8m (258p/share), and EPRA NTA to £107.5m (255p/share). Loan-to-value climbed to 55.5% (from 53.1%), reflecting higher borrowings of £151.3m, including a £5.3m debenture buyback and new investments: £5.6m in London retail and $5m (£3.8m) in a US fund targeting an 8% preferred return. Operationally, CitiPark revenue grew 10.2% to £15.4m, and void rates improved to 4.9% (from 7.4%). The portfolio remains concentrated in Leeds and Manchester (87%), with 44% of assets rated EPC B or above. The company maintained its dividend at 5.0p, representing 72.1% of EPRA earnings, and reports £15.0m LTV headroom and £39.3m undrawn credit. Development pipeline GDV is over £500m, but major projects remain pre-construction. The data shows operational improvement and earnings progress, but leverage and exposure to property values have increased.

Analysis

The announcement is measured in tone and provides a comprehensive set of realised financial and operational metrics, including statutory and EPRA earnings, net assets, void rates, and segmental revenues. The majority of claims are realised and supported by disclosed numbers, such as improved EPRA earnings, reduced statutory loss, and operational improvements in void rates and rent collection. Forward-looking statements are present but largely relate to the development pipeline (GDV over £500m), future asset recycling, and sustainability initiatives, which are appropriately caveated and not presented as imminent. The capital intensity flag is triggered by the large development pipeline and recent investments, with benefits from these projects clearly described as contingent on future market conditions and funding. There is no evidence of narrative inflation or exaggerated claims; language around future value creation is cautious and conditional. The gap between narrative and evidence is minimal, with the company acknowledging both progress and ongoing risks (e.g., higher LTV, macro volatility).

Risk flags

• ●Leverage risk is elevated: loan-to-value increased to 55.5% (from 53.1%), driven by new investments and property value declines, which could constrain future borrowing or require asset sales if valuations fall further.
• ●Development execution risk is material: the pipeline exceeds £500m GDV, but major projects such as the Merrion Centre student accommodation and Whitehall Riverside office remain pre-construction, contingent on pre-lets and funding, exposing TCS to potential delays and cost inflation.
• ●Macroeconomic and sector risk persists: management cites ongoing volatility from geopolitical events (US/Iran conflict) and rising UK operating costs, which could impact tenant demand, asset values, and operating margins.
• ●Interest rate exposure is significant: 25.3% of net borrowings are variable rate, and the weighted average cost of debt is 5.2%, with further increases possible if rates rise or refinancing becomes more expensive.
• ●Portfolio concentration risk remains: 87% of assets are in Leeds and Manchester, making the company vulnerable to regional economic shocks or property market downturns.

Bottom line

Town Centre Securities delivered improved underlying earnings and operational performance, but higher leverage and a modest property value decline temper the positive momentum. The company’s strategy of asset recycling and selective investment is credible, with detailed disclosure of financials, portfolio composition, and capital structure. However, the increased loan-to-value ratio and reliance on future development progress introduce execution and refinancing risks. The dividend is maintained at 5.0p, but further asset sales or earnings growth will be needed to bring leverage below 50% as targeted. Investors should focus on evidence of pre-lets, funding, or construction starts for the major development pipeline, as well as progress in reducing leverage. The most important takeaway is that while core operations are robust, balance sheet risk has risen and future value creation depends on disciplined execution of development and capital recycling.

Announcement summary

(LSE:TOWN) Town Centre Securities PLC announced its audited final results for the year ended 30 June 2026, reporting another year of stable performance despite a volatile macroeconomic backdrop influenced by the US/Iran conflict and increased employer operating costs. The company’s like-for-like portfolio valuation declined by 1.5% from June 2025, compared to a 2.4% decrease in the prior year. Statutory net assets stood at £108.8m or 258p per share (FY25: £112.3m, 266p), while EPRA net tangible assets were £107.5m or 255p per share (FY25: £109.9m, 261p). The statutory loss after tax was £1.4m (FY25: £3.4m loss), with a statutory loss per share of 3.2p (FY25: 8.2p loss), reflecting valuation losses and impairments of £3.7m. Statutory loss before tax was £0.3m (FY25: £1.1m loss). EPRA earnings before tax were £3.3m (FY25: £2.9m), and EPRA earnings per share before tax were 7.8p (FY25: 7.0p). EPRA earnings after tax rose 64% to £2.9m (FY25: £1.8m), with EPRA earnings per share at 6.9p (FY25: 4.2p). The company’s loan-to-value ratio increased to 55.5% (FY25: 53.1%) following two investments and property value reductions, with total net borrowings of £151.3m (FY25: £139.9m), including £77.1m debenture. The weighted average cost of borrowings at period end was 5.2%, with 74.7% at fixed rates. A proposed final dividend of 2.5p per share brings the total dividend for the year to 5.0p (FY25: 5.0p), representing 72.1% of EPRA earnings, to be paid on 7 January 2027 to shareholders on the register on 18 December 2026. The company’s portfolio is diversified: 35% retail and leisure, 28% offices, 13% car parks, 12% residential, 8% developments, and 4% hotels, with 87% located in Leeds and Manchester. The void rate decreased to 4.9% at 30 June 2026 (7.4% at 30 June 2025), and rent collection exceeded 99%. CitiPark gross revenue increased 10.2% to £15.4m (FY25: £14.0m), with 99% of the car park portfolio operating on CitiPark’s barrierless, ANPR-based system. In March 2026, the company bought back £5.3m of debenture stock at £97.50 per £100 nominal, funded from working capital and a £2m revolving credit facility drawdown, reducing the debenture’s nominal value to £77.1m. The Handelsbanken revolving credit facility was renewed to June 2029, and the Lloyds facility extended to June 2028. The company has £15.0m loan-to-value headroom and £39.3m of undrawn committed revolving credit facilities. The development pipeline has an estimated GDV of over £500m, including a 1,039-bed student accommodation scheme at the Merrion Centre (GDV over £155m), the ‘Z’ office development at Whitehall Riverside, and the Piccadilly Basin mixed-use scheme (GDV over £170m). In November 2025, TCS acquired a retail-led property on Marylebone High Street, London for £5.6m, and in August 2025 invested $5m (£3.8m) in a US fund targeting small multi-family residential units in the Midwest, with an expected preferred return of 8% per annum. Sustainability initiatives include 44% of assets rated EPC B or above and a switch to 100% renewable electricity. The like-for-like value of the portfolio decreased by 1.5% (£3.7m) after £8.5m of capital expenditure. The company did not sell any properties during the year and acquired one retail property investment. The company aims to bring LTV back below 50% through asset recycling, retained earnings, and income growth. Resilient trading performance has continued into the first half of FY27, with rent collections over 99% and car park and hotel businesses trading in line with expectations.

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