London & Stamford bullish on buy-to-let

But rental growth was impressive, with underlying profits more than doubling year on year – hence the decent dividend hike. The residential portfolio has been performing particularly well, with the apartment block in Highbury showing 14 per cent annual rental growth.

Indeed, management is so enthusiastic about the private rented sector that it's thinking of establishing a standalone Reit. Mr Vaughan sees a "sweet spot" in the rental market for one and two bedroom flats in London's inner suburbs, where demand from young professionals is strong. He bought two schemes in the period for £73.5m in aggregate – a 74-unit apartment block on the Clapham Road and a construction site on Seward Street, Islington, due for completion in 2013. London & Stamford now owns nearly £170m of housing assets.

The group made three other acquisitions in the period; one City office and two distribution warehouses, for £31.9m. The office, which is wedged between St Paul's Cathedral and the Thames, was acquired cheaply because the tenant, Goldman Sachs, has a 2013 break clause. London & Stamford is currently working on refurbishment plans on the assumption that Goldman will move out, although the bank hasn't made its intentions clear.

Adjusted NAV was slightly down in the period, from 122p to 121p, as profits and valuation gains didn't quite compensate for the dividend pay-out. The valuation surplus was only £1.6m over the period because of a £12m writedown on the industrial portfolio. Focus DIY went bust in May, leaving the group with an empty warehouse. Mr Vaughan is sure the site will soon be let, after five months of refurbishment but, meanwhile, the surveyors have docked its book value, offsetting gains on the apartment blocks and its stake in Meadowhall shopping centre.

Peel Hunt expects year-end adjusted NAV of 124p.