West End landlord Shaftesbury's (SHB) frugal yet meticulous regeneration of once grubby bits of Soho and Covent Garden has earned it the unequivocal admiration of the property industry and investors alike. The regeneration work continues - but with an unusual level of large-scale redevelopment that has led to a temporary dip in rental profits.
Net rental income rose marginally to £35.9m over the six-month period, but adjusted pre-tax profits - which strip out property revaluations - fell 5.6 per cent to £15.2m. That gives earnings per share of 6p, leaving the dividend uncovered. Chief executive Brian Bickell says he would not have proposed the 5 per cent dividend hike if he were not confident profits would jump back when the developments start generating income next year. The two big schemes around Carnaby Street are expected to generate £2.9m a year in rents - £2m more than prior to redevelopment.
Reported profits stormed ahead because property revaluations were much stronger than last year, up from £22.3m to £62m. That reflected like-for-like growth of 3.4 per cent in the estate's estimated value, driven by a 2 per cent uplift in open-market rents. The gap between these estimated rents and the actual rent roll - the so-called "reversionary potential" built into the pattern of new lettings and lease renewals - continues to widen and now stands at £19.7m.
Broker Investec expects adjusted net asset value (NAV) of 534p at the year-end.
SHAFTESBURY (SHB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 661p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 661-662p | 12-MONTH HIGH: | 670p | LOW: 484p |
| DIVIDEND YIELD: | 1.9% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 40% | |||
| INVESTMENT PROP: | £1.91bn | NET DEBT: | 48% | |
| Half-year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 429 | 38.1 | 15.1 | 5.95 |
| 2013 | 471 | 81.8 | 32.1 | 6.25 |
| % change | +10 | +115 | +113 | +5 |
Ex-div: 12 Jun Payment: 5 Jul | ||||
