Why Shaftesbury is still in the place to be

Net asset value would have been 24p per share higher without the cost of early termination of debenture debt and interest rate swaps on a notional £55m. However, future finance costs will fall after the 8.5 per cent debenture stock was refinanced with a 2.5 per cent mortgage bond, which raised £285m and provided additional net resources of £189m. Termination of the interest rate swaps will save £1.9m a year. Overall, the weighted average cost of debt fell by a percentage point to 3.9 per cent and the average maturity of debt increased.

New lettings and renewals were concluded at 7.7 per cent above September 2015 estimated rental value, and refurbishment schemes across 202,000 sq ft have an estimated rental value of £14.2m. However, there could be future downward pressure on rents: some tenants face an increase of up to 45 per cent in business rates from next April, although this is less than nearby locations and central London. And Shaftesbury has no trouble filling its portfolio with tenants, and the vacancy rate remained at a nominal 1.6 per cent. Furthermore, reversionary potential, which is the extra rental value if all rents were marked to market, grew by £3.9m to £29.1m, around a quarter more than current annualised income.

Of the major schemes currently in progress, Thomas Neal's Warehouse was completed after the financial year-end and is already encouraging interest from prospective tenants, while work continues on the Charing Cross Road site that will ultimately provide a new gateway into Chinatown when it completes in early 2017.

Analysts at Peel Hunt have upgraded their estimate for adjusted net asset value at the September 2017 year-end from 824p per share to 900p (from 888p a year before).