Shaftesbury has a well-deserved reputation for generating long-term growth by slowly, yet meticulously, regenerating streets in Soho, China Town and Covent Garden. A solid set of half-year results won’t dispel this reputation but, those impatient for immediate rewards, may be underwhelmed.
The London property recovery that has boosted Shaftesbury’s reported profits over the past three years is now over. The estate rose just 1.4 per cent in value over the six months, even though estimated market rents rose by 5.1 per cent and yields were steady. New chief executive Brian Bickell attributes the discrepancy to “gloomy” surveyors discounting future cash flows in uncertain times.
But rising rents did boost the portfolio’s reversionary potential – the difference between actual rents and current market rents – to £17.6m, which should be realised as leases gradually expire over the next five to 10 years. Such reversions were the main driver of an impressive 10.6 per cent gain in net property income for the period, compared to the first half of last year, which encouraged management to lift the dividend. That may fall over the following period as the company undertakes a couple of substantial refurbishment projects near Carnaby Street.
Broker Investec Securities expects full-year adjusted NAV of 491p (2011: 477p).
SHAFTESBURY (SHB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 514p | MARKET VALUE: | £1,291m | |
| TOUCH: | 513-514p | 12-MONTH HIGH: | 543p | LOW: 424p |
| DIVIDEND YIELD: | 2.3% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 20% | |||
| INVESTMENT PROP: | £1.74bn | NET DEBT: | 49% | |
| Half-year to Mar 31 | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 421 | 101 | 43.5 | 5.50 |
| 2012 | 429 | 38.1 | 15.1 | 5.95 |
| % change | +2 | -62 | -65 | +8 |
Ex-div: 13 Jun Payment: 6 Jul | ||||
