Shaftesbury in the right place

And things could get even better for Shaftesbury. Six underground stations currently serve the area and handled 245m passengers last year. The opening of two new Crossrail stations in two years' time is expected to boost capacity by 10 per cent.

Situated within the heart of London's tourist land, Shaftesbury is no stranger to demand exceeding supply for its space. This means, unlike most other places, West End rents are not very cyclical because the demand is always there. Indeed, of the 14 acres Shaftesbury owns and a further 50 per cent stake in a 1.9-acre site with Longmartin, the amount of space available to let is just 1.3 per cent of the portfolio.

Shaftesbury does make additions to its portfolio when it can and spent £25.8m in the year to September on sites in Carnaby Street, Covent Garden, Soho and Charlotte Street, with a further £22.1m spent since the year-end. But with large acquisition opportunities conspicuous by their absence, Shaftesbury focuses on improving returns from existing assets, some of which will benefit greatly from refurbishment.

For example, planning consent has been granted to renovate 45,000 sq ft of space on Charing Cross Road that will provide a vibrant new entry into Chinatown, while an underused building in Broadwick Street will see an increase of 8,000 sq ft, subject to planning consent. Shaftesbury also works closely with local authorities to improve lighting and pedestrian surfaces to encourage greater footfall.

Given the attraction of West End property, valuations have been increased on a regular basis, and the net asset value (NAV) on the portfolio is expected to have doubled in the five years to 2017. Rental income is also growing as leases come up for renewal, and the reversionary rate - that measures the difference between current rents and what they would be if they were at current market rates - is £25.2m, some 25 per cent above current income.

Headline profits are likely to fall, but that's because the pace of valuation uplifts is expected to slow. What remains important, and what is reflected in the adjusted recurring earnings figures in the table below, is that rental income is expected to rise. Rents are expected to be up 9 per cent in the year to September 2016 to £92.1m and to £99.2m the following year. Shaftesbury has also kept a hold on net debt, with a very modest loan-to-value ratio of just 22.5 per cent.