Songbird Estates has delivered a solid set of interim results, posting a 3.7% increase in net asset value to 194p a share.
The majority owner of Canary Wharf Group announced an 8.1% increase in the value of its net assets, which rose to £1.9bn on the back of an £88m rise in the value of its property portfolio, £6.6m in underlying profit and £43.3m from a tax provision.
The market value of the investment portfolio increased by 1.9% to £4.7bn in the first half of 2011, primarily reflecting a hardening in rental values. Retail assets took the lead, increasing in value by 4% in the six months to the end of June.
Including development sites, the market value of the property portfolio at 30 June was £5bn – up 3.3% from £4.9bn at the end of the year.
This rise was largely attributable to the 25 Churchill Place development site, where a 250,000 sq ft prelet to the European Union’s European Medicines Agency was agreed in May as part of plans for a 500,000 sq ft office building.
At the end of the period, the initial yields for retail and offices were both 5%, while the equivalent yields were 5.3% and 5.2%, respectively.
During the period, the group’s stake in Canary Wharf Group rose slightly to 69.3%, as 741,387 shares were acquired for £2.24m.
Canary Wharf Group declared a dividend of £45m – of which £31.2m will go to Songbird and will be used partly to pay the accumulated coupon on its preference shares.
Underlying profit before tax for the first half of 2011 was £6.6m compared with £13.1m for the comparative period in 2010.
After a strong first half and some recent high-profile deals including a joint venture with Qatari Diar to redevelop the Southbank’s Shell Centre, the firm noted that the outlook for the second half of the year is less certain.
However, it said that the London market, “where supply of high-quality grade A space is still limited and the number of development completions is still relatively low, there remain opportunities for the group to add value and maximise returns on projects”.
bridget.oconnell@estatesgazette.com
