Property specialist Shaftesbury launched a £149m two-for-three rights issue alongside its half-year results to capitalise on the "exceptional opportunity" to expand its freehold ownerships in London's West End.
The second real-estate investment trust (Reit) to launch an opportunistic fund raising in as many days, the fully underwritten issue at 175p a share has been pitched at a 53 per cent discount to Tuesday's closing price. Chief executive Jonathan Lane now plans to expand Shaftesbury's Chinatown holdings and acquire properties in the Berwick Street area of Soho which have potential to be moved up the value chain.
Shaftesbury's property portfolio is proving resilient. The half-year loss was driven by a £124m valuation decline, but its portfolio only fell 10 per cent in value compared to 22.6 per cent falls to UK property recorded by the industry benchmark IPD in the same period.
| SHAFTESBURY (SHB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 389p | MARKET VALUE: | £527m | |
| TOUCH: | 387-389p | 12M HIGH: | 525p | LOW: 237p |
| DIVIDEND YIELD: | 1.94% | TRADING STOCK: | nil | |
| PREMIUM TO NAV: | 11% | |||
| INVEST PROPERTIES: | £1.1bn | NET DEBT: | 114% | |
| Half year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 572 | -93.6 | -67.6 | 5.0 |
| 2009 | 351 | -159.7 | -118.1 | 7.5 |
| % change | -39 | - | - | +50 |
Ex-div: 27 May Payment: 26 Jun | ||||
Click for a guide to the terms used in IC results tables.
Net rental income for the half year was £27.2m (an increase of 4.6 per cent year-on-year) and the estimated rental value (ERV) of shops and restaurants remained firm, with falling offices rents the only source of weakness. Management report that demand for shops and restaurants is holding up.
The rights issue has enabled the covenants on balance sheet gearing to be renegotiated up from 125 to 175 per cent before loans are in breach, which gives a comfortable level of headroom (100 per cent gearing on an adjusted basis at 31 March 2009), though this was at the cost of cancelling a £25m facility.
JP Morgan forecasts a full-year adjusted NAV of 373p (pre-rights issue dilution).
