Bloomberg News

Shaftesbury Earnings Rise on Demand for Space in West End

November 30, 2011

(Updates with analyst comment in fourth paragraph, rental income and valuation performance from seventh.)

Nov. 30 (Bloomberg) --- Shaftesbury Plc, the second-best performing U.K. real estate investment trust this year, said full-year profit rose 30 percent as it lifted rents at properties in London’s West End district.

Earnings excluding changes in asset values increased to 28.8 million pounds ($44.8 million), or 11.9 pence a share, in the year through September, from 22.2 million pounds, or 9.7 pence, a year earlier, the London-based company said in a statement. Net asset value advanced to 463 pence a share from 436 pence at the end of March.

Shaftesbury, which owns 500 properties in neighborhoods including Carnaby Street and Covent Garden, has benefited from demand from retailers, restaurateurs and companies for space. The West End’s mix of tourist attractions, theaters and London’s hub for designer stores make it a magnet for British and overseas shoppers, supporting rents and property values.

“The results underpin out view on Shaftesbury as one of the highest quality names in the sector,” said Osmaan Malik, an analyst at JP Morgan Chase & Co., who reiterated his “neutral” rating on the shares.

Shaftesbury had a 10 percent return this year from a combination of share price appreciation and dividends, the second highest of 17 U.K. REITs after A & J Mucklow Group Plc. By contrast, Capital Shopping Centres Group Plc, the U.K.’s biggest shopping-mall owner, had a 24 percent decline.

Shaftesbury advanced 2.7 percent in London trading to 495 pence as of 8:04 a.m. The stock has gained 9.5 percent this year, compared with a 10 percent decline in the FTSE All-Share REIT Index.

Brian Bickell, Shaftesbury’s finance director since 1987, took over as chief executive officer on Oct. 1. He replaced Jonathan Lane, who relinquished the role held since founding the company in 1986 to become deputy chairman.

Net rental income gained almost 16 percent to 66.6 million pounds. The vacancy rate, excluding space under offer and properties undergoing refurbishment or redevelopment, was little changed at 1.2 percent.

Average rents, excluding the effect of acquisitions, rose 7.5 percent from a year earlier.

“London continues to prosper and grow,” Chairman John Manser said in the statement. “We remain confident that, despite the current general climate of great uncertainty, we will maintain out record of delivering rising income, dividends and capital growth in the years ahead.”

Net income fell to 113.8 million pounds from 167.1 million pounds in fiscal 2010 after the value of Shaftesbury’s real estate appreciated more slowly.

Shaftesbury plans to pay a second-half dividend of 5.75 pence a share. That takes the total for the year to 11.25 pence, a 9.8 percent increase on the previous year’s payout.

--Editors: Ross Larsen, Andrew Blackman.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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