West End woes caught up with central London specialist Benchmark this morning, as it reported a 2% drop in the value of its portfolio.
In the six months to 30 June 2001 net asset value (NAV) per share fell to 373.6p from 379.9p and on a diluted basis fell from 370.9p to 366.1p. Valuation of the portfolio also saw an overall reduction of £17.8m, or 2%. Pre-tax profits fell to £9.6m from £14.6m.
Net rental income for the period, excluding rental income from joint ventures, rose 3% from £15.0m to £15.4m.
Chairman Tan Sri Quek Leng Chan said the previous year’s profits had been high owing to the sale of shares in Nexus Estates for £6.5m, and that the reduction in valuations was as a result of a fall in market rents and estimates of future rents for offices rather than a shift in yields. But he admitted the portfolio was being hit by the economic slowdown.
“London continues to experience weaker conditions, particularly in the West End where the majority of our assets are concentrated. The City of London and Canary Wharf have also now begun to feel the effects of the weakening trend and, overall, in London top-quality office rents have declined by just under 10% from June 2001 levels,” he said.
He added that retail rents had remained robust and that there were few vacant shop units in the West End. “West End office vacancy rates are now running at about 8% and in the City at about 6%, but in each case under 1% of the vacant space is what we would describe as Grade A quality.
“This is however a marked increase of total availability since June 2001 and there are less potential tenants in the market.”
He said the outlook was positive and the group would continue to sell property while there was interest. “We have weathered well the more difficult general economic conditions prevalent in the first half of our current financial year and our balance sheet is well positioned to meet the immediate future resolutely.”
EGi News 28/01/02
