Quintain sees UK property market revival signs

Source : Business Times – 30 Jul 2009

Uncertain rental prospects for vacant properties still a concern, however

UK developer Quintain Estates and Development says Britain’s fractured commercial real estate market is showing signs of revival although uncertain letting prospects for vacant properties remain a concern.

The urban regeneration specialist, which is redeveloping almost 120 hectares of land in London’s Wembley and Greenwich Peninsula districts, said yesterday that prices were stabilising in some parts of the market but the company did not rule out further reductions in values, especially for lower-quality assets.

Despite challenging economic conditions, Quintain said its ability to collect rents remained strong, with 99.5 per cent of rents due gathered at the last payment date.

While bad debts almost doubled in the period to £580,000 (S$1.38 million) following the administration of furniture retailer MFI, vacancy rates were unchanged since March 31.

Last month, Quintain said the net asset value of its properties plunged 40 per cent to 348 pence per share in the year to end-March 2009.

Shares in the firm have rallied 82 per cent since the start of the year as worries of cashflow pressures and poor access to debt funding subside.

But the stock, which closed at 67 pence on Tuesday, is still 60 per cent below its level of July 2008.

Quintain said it made cost savings of £11 million since April, bringing the total sum of savings to £108.5 million since April 2008.

The company has also renegotiated terms of key borrowing facilities with Barclays, extending repayment dates on some short-term loans to April 2013 from April 2010.

The company’s maximum gearing ratio has increased to 150 per cent and net debts stood at £547 million on June 30.