Family property group nurtures high-rise profits
IN 1959, Arnold Ziff founded Town Centre Securities, a regional property business focused on Leeds and Manchester. The company floated a year later and has been a consistent stock market performer ever since.
Now run by Arnold’s son, Edward, the shares are 277½p and are well worth a look. The price is expected to rise over the coming years and the group has a history of paying solid dividends, too.
Edward joined the firm in 1981, straight after graduating from Leeds University. He has been there ever since, becoming chief executive in 2001 and chairman three years later. His son Ben is on the board, too, and his brother Michael is a non-executive director.
This is a family business and proud of it, with decades of experience, a network of influential contacts and a reputation for long-term outperformance. The immediate family owns about half the shares and more distant relatives own another 15 per cent or so.
Town Centre’s largest property is the Merrion Centre, one of the most popular shopping malls in Leeds. Tenants include Morrisons, Sainsbury’s and Boots, there is an 1,100- space multi-storey car park and around 200,000 visitors every week, or more than 10million a year.
The firm also owns well-located retail and office properties in and around Manchester, Glasgow and Edinburgh, as well as more sites in Leeds and a few in London. There is also a thriving car park division, CitiParks, run by Ben. A car and technology enthusiast, Ziff junior has transformed this business, adding new car parks, upgrading existing ones and ensuring every site has state-of-the-art IT, such as automatic number plate recognition.
Town Centre is actively involved in several development projects too, which will boost property valuations and income over the next few years. A new 134-room hotel opens in Leeds next month, including a restaurant by top chef Marco Pierre White, who grew up in the city. A Premier Inn has just been completed and the group is refurbishing a huge office block in partnership with Leeds City Council.
These three developments alone are expected to boost the valuation of Town Centre’s properties by more than £6million and add around £1.8million to annual income over the next two years.
And Town Centre is also working on a substantial residential scheme near Piccadilly Station in Manchester, which will create more than 90 new homes.
More broadly, Edward Ziff is refocusing Town Centre’s portfolio around Manchester, Leeds and the London suburbs, selling some sites in Scotland to provide the cash he needs to expand elsewhere.
Half-year profits to December 31, released last week, showed an 8 per cent increase in underlying profits and a 5 per cent hike in the interim dividend to 3.25p.
Brokers expect full-year profits to rise by almost 20 per cent to £7.9million, with the dividend rising just over 5 per cent to 11.6p. Further growth is forecast for 2018 and beyond as well.
The firm derives more than 75 per cent of its income from the North – a region that has not enjoyed the same booming valuations as the South East, but which is expected to be more resilient in the next few years. Careful buying in London suburbs, away from the showier parts of the capital, should also boost growth.
Midas verdict: At 277½p, shares in Town Centre Securities lag many of its peers in the property sector. This is undeserved. The company has outperformed larger rivals over the past five and ten years, combining conservatism with a determination to deliver sustainable growth and generous dividends. Looking ahead, that combination makes the shares a strong, long-term bet.
Traded on: Main market Ticker: TOWN Contact: tcs-plc.co.uk or 0113 222 1234