Peel Holdings, the out-of-town retail specialist, reckons that the rental growth and increases in open market values of its superstore developments are currently outstripping most other forms of property investment.
It has a £14m surplus on valuation to prove its point. The annual report will disclose that Peel pushed up its square footage of completed retail schemes during the year to March 31 1987 from 1.16m sq ft to 1.64m sq ft, with the annual rental income on completed schemes rising from £4.16m to £6.31m. The open market value of the completed retail schemes was £93.9m compared with £62.2m a year earlier.
All that has helped push up net assets per share from 425p to 531p. That figure excludes a £2m-plus surplus on housing land which is included in the balance sheet at cost. If that were put in at valuation, assets per share would be up by another 11p to 542p a share.
Peel’s pre-tax profits increased during the year from £5.35m to £8.05m, compared with a forecast of not less than £7.9m. Earnings per share jumped from 32.9p to 38.9p.
The dividend is lifted from 8.75p to 9.5p a share with a final of 6.5p.
The company is proposing a one-for-one scrip issue, which should have the effect of halving the rather heavyweight share price.
Since the end of the year, Peel has undertaken three major financial transactions which have had the effect of reducing the gearing in the balance sheet and replacing variable rate debt with fixed rate money.
The first deal was the issue of 25m new convertible preference shares, the second was the issue of a further tranche of debenture stock and then, in June, Peel agreed a £50m medium-term banking facility.
The new money provides the group with the financial fire-power for the development programme to continue to expand, and the company says that means its future prospects are excellent.
“The present year has got off to a good start and I confidently expect increased benefits to materialise from the continued implementation of our strategies,” says chairman John Whittaker.
Peel is adding a new dimension to the operation with the setting up of Peel Developments (UK) which will concentrate its efforts on property dealing and property development for sale, adding trading profits to the group totals. Until now, most developments have been retained for investment.
The group is expecting to make increased land sales to take advantage of planning gains, while other reasons stated for forecasting “continued growth in profits and assets” are the retail development programme, further lettings on refurbished industrial property, increased activity in trading and the gradual expansion of residential development.
