Any good news
The basic problem is evident from these results, with the value of like-for-like portfolio having been marked down 6 per cent. As every pound of equity comes with three pounds of debt, the knock-on effect on net asset value (NAV) was eye-watering. LSR can do little to help the situation. Cash flows remain robust. The rent roll was down 1.7 per cent, reflecting rent concessions for struggling tenants and a slight increase in voids, yet that was more than offset by increased fee income from the company's expanding joint ventures. Overall, recurring profits were 5.1 per cent higher than last year.
Property values are falling not because of the rental market, which is flat, but because neither investors nor lenders have any appetite for small shops outside the south east of England. Nationwide, the Co-operative and Clydesdale & Yorkshire Bank have all but pulled out of the market, Mr Gregory reports.
|LOCAL SHOPPING REIT (LSR)|
|ORD PRICE:||35p||MARKET VALUE:||£29m|
|TOUCH:||35-36p||12-MONTH HIGH:||35p||LOW: 53p|
|DIVIDEND YIELD:||11.4%||TRADING PROPERTIES:||nil|
|DISCOUNT TO NAV:||30%|
|INVESTMENT PROPERTIES:||£182m*||NET DEBT:||317%|
The share price slide over the past 18 months has been worrying. But at this point, with the shares 30 per cent below the end of September's break-up value, investors should wait for the results of the strategic review. Hold.
Last IC view: Hold, 38p, 13 Nov 2012