Coronavirus - 15 December


• London moves to Tier 3
• US FDA finds Moderna’s vaccine to be safe and 95% effective.
• UK loses 819k jobs since February, according to ONS
• Relaxation of UK rules for Christmas to be reviewed

Company news 

Buildings & Construction

 Springfield Properties – “Build and sales activity at Springfield rebounded strongly following the resumption of operations, post lockdown, from late June 2020, with the group delivering against a substantial backlog and experiencing high levels of demand. As a result, the group expects total revenue for the first half of 2020/21 to be approximately 17% higher than in H119/20, in line with market expectations, and has substantial visibility over full-year forecasts. The group also expects to report a material reduction in net debt to approximately £33.6m at 30 November 2020, from £68.8m at 31 May 2020.

Revenue growth has been driven by a strong performance from the group’s private housing and primarily reflects the completion of homes that had been scheduled to be delivered in April and May (for the previous two years, these months had accounted for 30% of the group’s annual revenue).”

Real Estate

 Shaftsbury – “As government restrictions tightened from mid-September, footfall decreased again and then largely evaporated during the second lockdown in November. Together with restrictions on hours of trade and social distancing, this had a very challenging impact on all consumer-facing, footfall-reliant businesses, which are inevitably cash flow sensitive. Consequently, this has presented material operational and financial challenges for our occupiers, particularly those in our restaurants, cafés, pubs and shops. Office occupiers, particularly those with direct or indirect exposure to consumer-facing businesses, and residential tenants have also been affected, but to a lesser extent.

In turn, these challenges have affected occupiers’ ability to meet both rental and other lease obligations or remain solvent. For us, there have been a number of consequential outcomes:

• Rent collections have been significantly below normal levels. For the second half of our financial year, cash collections represented 53% of contracted income.

• Reduced net property income as a result of rental income write-offs, impairment charges and additional costs, either due to increased vacancy or tenants’ inability to pay for service charge expenditure. Net property income for the year was £74.3m, down 24.2% YoY.

• The amount of vacant space across the West End, in general, and in our portfolio, has increased significantly. At 30 September 2020, wholly owned EPRA vacancy was 10.2%, compared with a 10-year pre-Covid average of 2.9%. By 30 November 2020, it had risen to 12.0%.

• Occupational demand has slowed, with operators often not prepared to commit to leases until there is better visibility on the timing of the return to more-normal footfall and trading. The rental value of commercial leasing activity in the second half of our financial year was £4.8m, compared with £16.9m during the same period last year. Of the total, rent reviews accounted for £2.7m.

• The change in the balance between supply and demand for space has led to pressure on rental levels. Together with general uncertainty, this has resulted in an 18.3% like-for-like decrease in the valuation of our wholly owned portfolio in the year, most of which occurred since pandemic concerns first materialised.

• With more competition for occupiers, we are now having to incur more capital expenditure on our vacant food, beverage and retail units to maximise their letting prospects.

The government has announced that London and parts of the Home Counties will be moving to Tier 3 restrictions, beginning from 16 December 2020 until further notice. As a result, all hospitality businesses will close other than for takeaway or home delivery services and non-essential travel into or out of the Tier 3 area is discouraged.


• According to the ONS there were 819,000 fewer workers on UK company payrolls in November than at the start of the pandemic. Hospitality was the worst-hit sector, accounting for a third of the job losses, followed by retail, according to the Office for National Statistics The unemployment rate rose to 4.9% in the three months to October, with the jobless total up to 1.7 million.

• The Netherlands is to go into its strictest lockdown yet, with non-essential shops, theatres, gyms and hairdressers shutting today until 19 January and schools closing tomorrow.

• France’s lockdown has ended, but strict restrictions are still in place – there is a curfew from 20:00 to 06:00, which will be lifted for Christmas. Theatres and cinemas are staying shut.

• South Africa has announced new restrictions to try to contain a second wave of Covid-19. President Cyril Ramaphosa said the sharp rise in new infections was a cause for great concern, as he announced plans to close some beaches and limit mass gatherings over the holiday period.

• A new variant of coronavirus has been found, which is growing faster in some parts of England. The mutations involve the spike protein of the virus – the part that helps it infect cells, and the target Covid vaccines are designed around.

• From January Singapore will open a new segregated travel lane for a limited number of business, official and high economic value travellers from all countries, the government said today, as part of efforts to revive its key travel and hospitality sectors.

• Greenwich Council has been ordered by central government to keep its schools open.

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