Shaftesbury shares spoils from London's booming West End

As London's West End continued to attract shoppers and tourists in droves, landlord Shaftesbury hiked its half-year dividend 10.5% as its portfolio grew in value and profits surged.

For the six months ending 31 March, the FTSE 250 group's EPRA net asset value grew 2.8% to £2.55bn lifting NAV per share 2.7% to 912p.

Net property income grew 4% to £43.8m and profit after tax by 27.8% to £102.4, mainly thanks to a decrease in the fair value deficit of interest rate swaps which management took out to protect the business from rate fluctuations and added 5.8p in the period, compared with an increased deficit last year. EPRA NAV excludes the valuation movements in these swaps.

Basic earnings per share up 27.4% to 36.7p and EPRA EPS by 12.3% to 8.2p above the first half of last year, as increased contracted income was accompanied by reduced finance costs, following October's refinancing via a £285m bond issue.

"This has been another busy period for Shaftesbury, with the benefit of asset management activity across the portfolio and last year's refinancing initiatives delivering growth in earnings, the interim dividend and portfolio value," said chief executive Brian Bickell.

"Across our portfolio, the data we collect is showing a clear trend of year-on-year turnover growth for our restaurant, leisure and retail tenants, reflecting the buoyancy of the West End's economy. Occupier demand for these uses, and our office and residential space, is good and vacancy levels remain low."

Being a real estate investment trust, Shaftesbury must distribute 90% of its net rental income via dividends, so an interim dividend of 7.9p per share was declared, up from 7.15p last time.

The total portfolio of property covering almost 14.5 acres of London restaurants, leisure and retail units clustered around Carnaby Street, Seven Dials and Chinatown, was valued at £3.45bn.

A total of 583 restaurants, cafés, pubs and shops extend to 1.1 million square feet and provide 70% of current income, with small offices and apartments for rent above these commercial premises topping up the remaining income.

A surplus of £61.6m arose from the revaluation of the group's wholly-owned portfolio, which represented a like-for-like increase of 2.1%, principally driven by growth in estimated rental value of 2.0%.

Looking ahead, Bickell said while the UK faces a period of uncertainty from the Brexit talks, which brings a risk of lower business and consumer confidence, "we expect the West End, underpinned by its wide appeal and dynamic economy, will maintain its long record of resilience".