(Alliance News) - London West End-focused property investor Shaftesbury PLC on Wednesday reported a fall in net asset value as Covid-19 hit visitor numbers.
EPRA NAV declined 11% to 878 pence per share at March 31 from 982p at the end of September 2019, which the company said was due to revaluation deficits.
Its wholly-owned portfolio valuation fell 7.9% in the six months to the end of March on a like-for-like basis to GBP3.5 billion following an increase in yields reflecting economic uncertainties, the impact of Covid-19 on near-term income and occupancy assumptions, and a softening of residential values.
The "decisive outcome" of the December 2019 UK general election helped to boost business confidence and investment as well as consumer activity, with Shaftesbury's occupiers reporting good footfall and spending over Christmas and the New Year, as well as in the early weeks of 2020.
However, Covid-19 began to hit leasing activity in February with a number of negotiations put on hold or terminated. The "collapse" in West End footfall was evident from early February in Chinatown and then spread across the rest of the area from mid-March, Shaftesbury said.
Underlying net property income before Covid-19 related provisions was up 2.1% to GBP49.6 million versus GBP48.6 million a year prior. After Covid-19 related provisions, it stood at GBP46.2 million.
Since February, Shaftesbury said it has completed leasing transactions with a rental value of GBP12.5 million, lower than GBP16.6 million a year before. The majority of lettings under offer at March 31 are not yet concluded, the company noted, pending better visibility on easing of Covid-19 restrictions.
"Although our business performed well during the first four months of the period, the growing impact of the measures to address the pandemic are having a material impact on normal patterns of life and commerce, both for our occupiers and on the near-term prospects for our business and financial performance," said Chief Executive Brian Bickell.
The company said it is in discussions with 800 commercial tenants to agree tailored solutions on rent and service charges. Shaftesbury said it aims to collect 50% of rents due from April to September "over time".
It said it expects the structure of leases to evolve, and it plans to move permanently to monthly rents in advance for all its commercial tenants from October.
Shaftesbury swung to pretax loss of GBP287.6 million in the half year to March 31, compared to GBP38.7 million profit recorded a year ago, due to a GBP300.2 million in negative valuation movements versus positive GBP19.0 million.
The stock was trading 1.8% higher in London on Wednesday at 659.94 pence each. The price is down 29% so far in 2020.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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