Shaftesbury has published its results for the year ended 30 September 2016. Its EPRA NAV at the end of the period was GBP8.88 per share, an increase of 19p (2.2%). Portfolio capital value growth added 43p (4.9%) before a reduction of 24p as a result of early termination of debenture debt and interest rate swaps. EPRA earnings increased by 8.0% to GBP39.0 million (2015: GBP36.1 million). EPRA earnings per share increased by 7.7% to 14.0p (2015: 13.0p). The total dividend for the year is 14.7p (2015: 13.75p), an increase of 6.9%.
The valuation of the portfolio at the end of the period was GBP3.35 billion. The underlying like-for-like capital value return over the year was +4.9% but the increase in Stamp Duty announced in the March 2016 Budget cut this to 4%. Vacancy at the end of the period was 1.6% but 1.1% was under offer. Acquisitions during the year totalled GBP62.7 million. These additions comprised nine shops, five restaurants and cafés, 2,850 sq. ft. of office space and four apartments. On acquisition, they produced an average net initial yield of 2.4%.
Net property income was up GBP5.3 million (6.7%) to GBP84.1 million. They say that the portfolio reversionary potential has grown by GBP3.9 million to GBP29.1 million, 26.6% above current annualised income, of which GBP14.2 million relates to refurbishment schemes in progress at 30 September 2016. They say that the buoyant conditions they reported last year have continued throughout the current year. Although there have been growing concerns of an economic slowdown nationally since the beginning of 2016, the West End continues to prosper, with steadily rising domestic and international visitor numbers and spending and demand from a broad-spectrum of businesses seeking space across all uses.
The recently announced revaluation of business rates across England will increase the levy on business premises in London from next April. Across their portfolio, they anticipate increases in the range 30% to 45%, depending on location. Broadly, they estimate that this will increase tenants’ occupancy costs by c. 2-3% of turnover. They support Westminster City Council’s initiative to seek to retain more of the GBP1.8 billion of business rates they collect on behalf of the Treasury. An increase from the 4% they currently keep would support their ambition to further invest in the borough’s infrastructure, in partnership with property owners and other stakeholders.
Shaftesbury say they are making good progress with major projects. At 30 September 2016, space held for, or under, refurbishment extended to 202,000 sq. ft., and represented 11% of ERV, an increase of 6.7% during the year. This included three major schemes: Thomas Neal’s Warehouse, Seven Dials, Charing Cross Road/Chinatown and 57 Broadwick Street, Carnaby, which totalled 101,200 sq. ft. and represented 5.7% of ERV. Once let, these schemes will add GBP7.4 million to annual income.
They completed the reconfiguration of Thomas Neal’s Warehouse, Seven Dials, in October 2016. The scheme provides 22,700 sq. ft. of retail space, including up to 3,000 sq. ft. for restaurant use. They say that, located close to the new Tottenham Court Road transport hub, this flagship accommodation, together with major public realm improvements in 2017, will further strengthen Seven Dials as a popular and distinctive retail and leisure destination. Earlham Street, which is part of an important pedestrian route from Soho towards Thomas Neal’s Warehouse, is set to undergo a major upgrade, commencing in spring 2017.
The Charing Cross Road / Chinatown redevelopment has now passed the half-way point and is on track to complete in spring 2017. Located next to Leicester Square Underground station, and within a short walk of Tottenham Court Road station, it will bring major improvements to this important block on Chinatown’s eastern boundary, which they expect to provide material benefits to our other holdings in Chinatown. The scheme will provide 35,000 sq. ft. of retail along a 330-foot frontage on Charing Cross Road, a street with high footfall, which is expected to grow materially once the Elizabeth Line opens; 13,500 sq. ft. of restaurant space, fronting Newport Place and Newport Court; and a much-improved gateway into Chinatown. Formal marketing will commence in early 2017. The expected cost is GBP14.5 million, of which GBP8.4 million had been incurred by 30 September 2016.
In September construction commenced at their major mixed-use project at 57 Broadwick Street, Carnaby. Situated within a few minutes’ walk of Tottenham Court Road’s new western ticket hall on Dean Street, this 30,000 sq. ft. scheme at this eastern gateway to Carnaby will provide: flagship retail space and a restaurant, together extending to 8,000 sq. ft., over the lower floors; 20,000 sq. ft. of refurbished and extended grade A office accommodation across the upper floors; and two apartments totalling 2,000 sq. ft. The project will complete in phases from late 2017, at an estimated cost of GBP14.5 million, of which GBP3.1 million had been incurred by 30 September 2016.
SHB : Shaftesbury highlights 30%-45% increase in business rates