Shaftesbury makes progress with lettings

(Sharecast News) - Shaftesbury made progress letting its larger developments in London's West End, though it was a little slow and contributed to year-end net asset value being slightly lower than expected.The FTSE 250 property developer reported a EPRA NAV per share of £9.91 as of 30 September, up 4.1% over the year as the portfolio valuation grew 3.8%.The letting of Thomas Neal's Warehouse in Seven Dials, where a major international retailer had pulled out in the first half of the year, was completed after the September year-end, just this month, while other major developments now have 84.4% of income contracted or under offer.While the company operates with a wider UK economy afflicted by uncertainty over Brexit and a tough retail environment, the West End location offers some insulation, though Shaftesbury has made slow lettings progress in its three completed larger schemes. The ERV of space available or under offer is £1.9m, representing just 1.3% of total portfolio ERV, while the vacancy rate fell to 4.6%, down from 6% a year ago, with a further 2.6% of the portfolio under offer."Whilst the pace of these lettings has impacted on revenue growth in the year ended 30 September 2018, they will now be making a useful contribution to earnings in the current financial year," the company said.Current annualised income of £121.5m was up 5.1% on a like-for-like basis, with estimated rental value of to £154.0m up 2.4% on a LfL basis. In the first half of the year LfL income growth was 3.7% and ERV was up 1.4%.Equivalent yield for the wholly-owned portfolio was down to 3.41% from 3.46% a year ago.Profit after tax fell sharply to £175.5m from £301.6m the year before following a revaluation surplus this year of £123.1m compared to £230.6m last time.A final dividend of 8.5p per share meant the total dividend was hiked 5% to 16.8p.Cash and available debt resources stood at £343.5m at year end, of which £92.7m has been earmarked for investment.Chief executive Brian Bickell said: "Our results continue to demonstrate the appeal and qualities of our carefully-curated and iconic destinations, underwritten by the global attraction and exceptional features of London and the West End. Footfall and spending in our locations continues to be largely unaffected by the widely-reported headwinds affecting the national economy and consumer confidence."He said demand continues to be firm and that by owning clusters of properties the company is able to "curate distinctive locations" to try and control their appeal "by offering an ever-evolving experience with a variety of affordable, contemporary retail, restaurant and leisure choices". He said internet-based retailers were starting to take physical space in Shaftesbury's locations "to promote their brand identities".Shares in Shaftesbury, which have picked up 6% since hitting a two-year low last month, struggled for direction on Tuesday morning. Just before 1100 they were flat at 920p.While NAV was slightly below its forecast of 1012p and consensus of 1005p, broker Numis said this "is of less relevance, in our opinion, than the slowdown seen in the performance metrics in H2 vs H1", though analysts said LfL income growth and LfL ERV growth were no weak per se.As management had highlighted previously that growth was expected to slow. Numis analysts also highlighted the "risk, in our view, that management is having to commit ever greater time dealing with its increasingly concentrated shareholder base (Sammy Tak Lee 26%; Norges 23%) than running the business".Liberum said the results "confirm another year of good income and capital growth, despite wider market uncertainty, demonstrating the quality of its portfolio", though NAV was 1% below its forecast, driven by rental growth and yield compression."Net rental growth remained a healthy +6% highlighting robust occupier demand across Shaftesbury's West End estate. Most positively, good progress was made letting the group's larger developments. A record year for purchases adds to the store of future development and rental growth potential."