Shaftesbury Capital has reported solid results for the year to 31 December 2023, as leasing activity picked up and valuations declines were muted.
The company transacted 526 leasing deals, representing £37.0m of rent, 10.0% ahead of estimated rental value (ERV). Annualised gross income increased 10.4% on a like-for-like basis to £192.8m. The portfolio ERV grew 6.9% to £236.9m.
The value of the group’s portfolio was down 0.8% on a like-for-like basis to £4.8bn (pro-forma 2022 £4.9bn) with ERV growth offset by equivalent yield movement of 26 basis points to 4.34% (pro forma 2022: 4.08%).
EPRA net tangible assets (NTA) was 190p per share (2022 reported pre-merger 182p and June 2023: 194p).
Rental growth and cost control resulted in strong earnings performance of 3.7p per share (2022: 2.2p). The company has proposed a final dividend of 1.65p, equating to a full-year dividend of 3.15p.
The company sold £145m of assets during the year, 8% ahead of valuation, with several other assets now under offer.
The company’s EPRA LTV rose to 31% (Dec 2022: 28%), while it has access to £486m of liquidity. During the year it completed the refinancing of its merger loan facility through a new £200m secured loan and a £350m senior unsecured loan facility.
Medium-term targets and outlook
The company said: “Over the medium-term we are targeting rental growth of 5%-7% per annum. With stable cap rates, this would result in average total property returns of 7%-9% and total accounting returns of 8%-10%.
“Despite the uncertain geopolitical and macroeconomic backdrop, our strong performance and leasing pipeline together with positive trading conditions across our West End locations provide us with confidence in the growth prospects for our exceptional portfolio.”
Other key financials highlights
- Total equity value of £3.5bn (Dec 2022 reported pre-merger: £1.6bn)
- 2023 total property return 2.2%; Total accounting return 5.8%; Total shareholder return 33.1%
- Underlying earnings of £60.4m, equivalent to 3.7p per share (Jun 2023: £27.5m)
- Adjusted EPRA cost ratio 40%, targeting a significant reduction towards 30% over the medium-term through income growth and cost control
- Net debt of £1.5bn (pro forma Dec 2022: £1.5 billion) and EPRA loan-to-value ratio of 31%
- Weighted average cash cost of drawn debt is 4.2% (Jun 2023: 4.3%)
- Weighted average maturity of drawn debt of 5 years (Jun 2023: 4 years)
Ian Hawksworth, chief executive, commented:
“It has been an excellent start for Shaftesbury Capital, with positive metrics delivered across the business. We set clear priorities and are pleased with the pace and performance over the first year with significant rental income growth and cost savings driving financial performance. There is strong leasing activity and pipeline across all uses with 526 leasing transactions completed at rents on average 10 per cent ahead of December 2022 ERV.
“Despite geopolitical and macroeconomic uncertainty, our portfolio has demonstrated its exceptional qualities with a stable portfolio valuation. There is a broad pool of investors attracted to prime West End real estate as demonstrated by recent sales totalling £145 million at a premium to valuation.
“Backed by our strong balance sheet, unique portfolio and talented team, we are confident of delivering further rental growth and attractive returns in the years ahead as the leading central London mixed-use REIT.”