St Modwen Properties (SMP) made solid progress with its shift in focus towards logistics and housebuilding, and in the six months to May 2018 it made disposals of £350m including 28 per cent of its retail portfolio.
Given the challenges within the retail sector, the retail disposals were made at a respectable 4 per cent discount to November 2017 book value, and retail assets now make up just 18 per cent of the total portfolio, of which two-thirds are expected to be sold over the next two years. Annualised passing rent fell by £11.7m from the end of 2017 to £48.5m, reflecting the loss of income on disposals. However, the proceeds are being invested into high-quality industrial logistics developments, where rental income secured so far is around double that achieved on retail assets that have been disposed of.
The logistics pipeline grew from 1m sq ft to 1.3m sq ft, of which St Modwen plans to retain around two-thirds. Since the start of this year, around 15 per cent has been pre-let, while in the overall commercial development pipeline around half is already pre-let or pre-sold. On the residential side, £27m of consented land was sold to housebuilders – double the previous first half. At St Modwen Homes, sales rose by nearly a third to 302 units.
Analysts at Peel Hunt are forecasting adjusted net asset value (NAV) at the November 2018 year-end of 470p, up from 451p in 2017.
| ST MODWEN PROPERTIES (SMP) | ||||
| ORD PRICE: | 426.8p | MARKET VALUE: | £949m | |
| TOUCH: | 426.6-427.6p | 12-MONTH HIGH: | 431p | LOW: 331p |
| DIVIDEND YIELD: | 1.7% | TRADING STOCK: | £36m | |
| DISCOUNT TO NAV: | 6% | NET DEBT: | 37% | |
| INVESTMENT PROPERTIES: | £1.07bn* | |||
| Half-year to 31 May | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 440 | 31.6 | 12.1 | 2.02 |
| 2018 | 455 | 25.9 | 9.4 | 3.1 |
| % change | +4 | -18 | -22 | +53 |
| Ex-div: | 9 Aug | |||
| Payment: | 4 Sep | |||
| *Including joint ventures | ||||
