LONDON -- Real-estate investment trust Shaftesbury (LSE: SHB ) today reported mixed results for the six months ended 31 March 2013.
Shaftesbury -- which owns 13 acres in London's West End, comprising over 500 properties in and around Carnaby, Covent Garden, Chinatown, Soho, and Charlotte Street -- posted operating profits of 15.2 million pounds. These are down slightly (5%) from the prior year as Shaftesbury spends money to refurbish many of its London properties.
Profit and total comprehensive income for the period amounted to 80.8 million pounds compared with 37.8 million pounds reported for the prior year, though this huge leap (114%!) is due largely to a nice increase in the estimated value of Shaftesbury's properties in London, as the capital city continues to attract visitors, businesses, and residents.
Brian Bickell, Chief Executive, commented:
London continues to benefit from its unique features and unrivalled variety of attractions which draw visitors, businesses and those who wish to live here. As we anticipated, growth in our rental income is tempered this year as a result of the unusually high level of refurbishment and development activity across our portfolio. With sustained good demand across all our uses, we expect these valuable projects will let well on completion and make an important contribution to our revenue growth. We continue to identify and progress other valuable schemes within our portfolio.
With a strong and resilient local economy, and our long established and proven management strategies, we are confident in the prospects for sustained income and capital growth from our unique and centrally located portfolio in the years ahead.
Shaftesbury says it continues to see strong demand for shops, restaurants, and leisure space, a major driver (71%) of the firm's rental income. Meanwhile, with good levels of interest from office occupiers seeking to locate or expand within the West End, overall commercial occupancy levels and rental demand continue to grow.
The firm reported net property income -- essentially, the rent it collects on its properties -- for the six months was flat at 35.9 million pounds compared with 35.5 million pounds in 2012. This was attributed to the unusually high level of improvements the company is performing on its portfolio -- people can't rent while you're refurbishing the space.
All this work (and generally strong demand for London property) looks to be paying off as Shaftesbury reported a property surplus revaluation -- this is not actual cash coming in but instead represents the estimated value of the properties it owns -- of 62 million pounds, up substantially from the 22.3 million-pound revaluation posted in 2012.
With the help of this increase in valuation, the company's earnings per share were 32 pence versus 15 pence last year. The company has declared an interim dividend of 6.25 pence per share to be paid on July 5.
Shaftesbury is certainly an asset play for investors today. But it didn't catch the attention of our four analysts, who've just compiled their latest investor bulletin, "5 Shares to Retire On."