Almacantar reported a profit of £1.6 million for the nine months ended September 30, 2012 which includes net property income of £10.0 million from its three investment properties. This largely comprises rental income from office and other commercial occupiers of the properties, reduced by direct costs of managing and leasing the buildings.
A significant proportion of income arises under leases with fixed rental levels. Most leases have a remaining period of several years. However, as described below, it is expected that rebuilding of the Centre Point and Marble Arch Tower properties will begin in 2014. At that time, annual income from those properties is likely to decline, before an increase in the value of the properties is realized after completion of the building work.
The group’s finance expense for the first nine months of 2012, amounting to £4.8 million, largely comprises interest expense on bank borrowings which are secured on the properties. A substantial level (approximately 87%) of bank interest expense is fixed under interest-rate swap agreements.
At September 30, 2012, the share capital of Almacantar amounted to £276 million of which £96 million was not yet called for payment by the shareholders.
In May 2012, Almacantar applied for a building permit to convert the Centre Point tower into exclusive apartments of a very high standard. In September 2012, the application was refused largely because of delays in obtaining authorizations from the relevant government authorities. A revised application is being prepared. It is anticipated that the building work will commence in 2014. At that time, the building will temporarily cease to generate income, and additional bank borrowings will be obtained, for a period of between two and three years.
The building currently comprises offices, other commercial occupiers, and a cinema. Almacantar is working with an architect to design a mixed-use building, including high quality residential apartments. Construction work is expected to begin in 2014.
In July 2012 Almacantar completed the purchase of CAA House. This property is also in the center of London and is leased by a British government agency.
Almacantar will continue its strategy of increasing the value of existing investments, in particular by applying for permission to undertake construction work to improve March Arch tower and Centre Point, while generating net income from CAA House. In addition, new property investments in central London will be sought, which have the potential for Almacantar to use its real estate skills to transform and add long-term value.