Shaftesbury slumps to loss as Covid-19 wipes £700m off valuations

London West End property owner Shaftesbury swung to a full-year loss as the coronavirus pandemic hammered rental income and the capital prepared to enter another round of top level restrictions.

The firm, which owns parts of the iconic Chinatown, Soho and Covent Garden retail precincts in the capital, on Tuesday said it expected pandemic control measures to last for most of 2021 as the government placed London into the highest level tier 3 restrictions from Wednesday at the height of the crucial Christmas trading period.

The curbs will result in the closure of pubs and restaurants, except for takeaway and delivery, along with theatres, bowling alleys and cinemas.

Shaftesbury reported a £699.5m post-tax loss for the year to September 30 compared to a profit of £26m a year earlier. The value of its estate dropped 18.3%, or £698.5m, to £3.1bn after being hit hard by the sharp fall in tourist numbers and office workers coming into the capital. Vacancies at shops, restaurants and offices had nearly tripled to 10.2%.

Net property income fell 24% to £74.3m, driven by a 3.5% like-for-like decrease in rental income and £21.9m in charges for expected credit losses and impairments.

“Rarely in history has the world seen such widespread disruption to normal patterns of life," said chief executive Brian Bickell.

“Only now are we seeing the first positive signs that conditions will begin to improve in the year ahead.”

Shaftesbury said leasing activity had fallen sharply since February due to the pandemic and was below normal levels, although inquiries had picked up in recent weeks. Landlords have been forced to rewrite lease agreements to help tenants get through the crisis, and the company said it had moved permanently to monthly rents for most commercial tenants from October.

It added that rental and service charge support for tenants was likely to continue through 2021, “with our occupiers having reduced income in the important period leading up to Christmas and into the new year, which traditionally has provided them with liquidity buffers to withstand the normally slower quarter to March”.