Songbird Estates (SBD) owns about two-thirds of Canary Wharf Group, which in turn owns the famous skyscraping offices and subterranean boutiques of the Isle of Dogs in east London. Trading last year provides a striking example of how the London real estate recovery is spreading beyond the West End. Underlying profits were actually a little lower at £22.4m, but the headline numbers were transformed by a £856m net revaluation of the property portfolio - substantially ahead of the £216m recorded a year earlier. Geared up by the company's complex and debt-heavy capital structure, that boosted underlying book value (NAV) by an extraordinary 38 per cent. Analysts are reviewing their NAV estimates in light of this sharp increase.
Once again, it was the retail side of the business that led the way, with the portfolio of over 300 shops fully let for the third year running. With a high number of lease renewals allowing a material increase in rents, the retail portfolio gained 15 per cent, with growth accelerating in the second half. But it was the much larger office portfolio that provided the surprise boost. After years of tracking sideways, it posted a 9 per cent valuation gain for the year, of which 7 per cent came in the second half. Overall rental income rose 4 per cent to £274m.
Plans to diversify the group's portfolio include initial planning approval for a 1.4m sq ft residential development at the Shell Centre on the South bank - although this remains hostage to a planning enquiry. Meanwhile, immediately east of the Canary Wharf estate, a planning application has been submitted for a 4.9m sq ft development for office, residential and retail use. The total development pipeline amounts to around 11m sq ft - the largest of any London developer.
| SONGBIRD ESTATES (SBD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 219p | MARKET VALUE: | £1.62bn | |
| TOUCH: | 217-219p | 12-MONTH HIGH: | 219p | LOW: 135p |
| DIVIDEND YIELD: | nil | DEVELOPMENT PROPERTIES: | £1.11bn | |
| DISCOUNT TO NAV: | 24% | |||
| INVESTMENT PROP: | £5.33bn | NET DEBT: | 135% | |
| Year to 31 Dec | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 168 | 335 | 57.7 | nil |
| 2010 | 187 | 464 | 41.3 | nil |
| 2011 | 190 | -213 | -9.0 | nil |
| 2012 | 210 | 202 | 15.9 | nil |
| 2013 | 290 | 1,037 | 84.8 | nil |
| % change | +38 | +413 | +433 | - |
*Adjusted NAV | ||||
