Shaftesbury says West End unaffected by wider economic woes

Shaftesbury said it felt little effect from uncertainty sweeping the retail and restaurant trades in the wider economy as the West End property company reported a surge in half-year profit.

Operating profit for the six months to the end of March jumped 43% to £141.2m from a year earlier as valuation gains and profits on disposals rose to £101.8m from £61.9m. Net property income rose to £46.2m from £43.8m.

The FTSE 250 company invests solely in property in the West End of London and owns large tracts of Carnaby Street, Soho and Covent Garden with tenants mainly in the restaurant, retail and leisure industries.

Retail chains and the restaurant trade have been hit by squeezed consumer spending, rising rents and labour costs and doubts about the wider economy as uncertainty hangs over Brexit discussions.

Retailers are also struggling to deal with shoppers’ shift online while casual dining chains are grappling with a glut of supply and higher food costs. Chains such as House of Fraser and Jamie’s Italian are renegotiating rents and closing stores as a result.

Brian Bickell, Shaftesbury’s chief executive, said the company was largely insulated from the malaise because the West End, a magnet for foreign visitors, is less sensitive to strains in the wider UK economy. London is a global city with high employment and an affluent population, he said.

He said: “The West End economy has been largely unaffected by business and consumer uncertainty following the 2016 EU referendum and the structural challenges facing national retail and restaurant chains. Interest in our space is good and occupancy remains high with occupiers recognising that the West End has a broad appeal to domestic and international businesses and visitors, as well as its large local working population, and a generally less price-sensitive customer base.”

The time it takes to let a property has increased but occupancy remains solid and interest in Shaftesbury’s properties is high, Bickell said. Visitors to London are expected to increase and the planned opening of the Elizabeth Line, previously known as Crossrail, in December will make getting to the West End easier, he added.

Shaftesbury shares were little changed at 991.5p at 08:35 BST.