Dear Kizzi,
There was little good news for investors in Shaftesbury plc, owner and manager of nearly 18 acres of prime commercial and residential property in London’s West End, which reported a decline in NAV of 24.3% to £7.43p. COVID 19 hit the company hard with reported pre-tax losses of £699.5m in the 12 months to September compared with a profit of £26m in the previous year as the portfolio value fell almost a fifth to £3.1bn. Shareholders also received negative news as London will go into Tier 3 level restrictions on Wednesday, at the height of the Christmas trading period, meaning closure for much of the West End.
Net property income fell 24% to £74.3m on the back of a 3.5% like for like decrease in rental income and £21.9m in charges from expected credit losses. Net rental income for the year fell almost 25% to £74.3m as vacancy leapt to over 10%, while the company announced it had only collected 53% of the rent it is owed for the six months to September 30th.
Despite the fact that headwinds are expected to continue, the company owns a unique portfolio in Central London and the balance sheet is solid with proforma gearing at a conservative 22.1% following the rights issue in October. As no dividend is proposed, investors in Shaftsbury will be betting on a longer term recovery in portfolio values as leisure and tourism rebound in 2022 and beyond. Those values now appear more reasonably underpinned by the large share price discount to proforma NAV giving an implied aggregate value per square foot of around £1,300.
Rob Murphy, MD, Financials at Edison Group