Shaftesbury

The UK quoted company is keen to attract more international investors to its focused London portfolio as its current shareholder base consolidates UK property company Shaftesbury may not be well known by visitors to London but its portfolio certainly is: Carnaby Street, the epicentre of swinging London in the 1960s; London’s Chinatown and the section of Covent Garden surrounding the unusual Seven Dials junction. The central London proximity of the estates gives the £600m portfolio a strong focus location-wise; chief executive Jonathan Lane is proud that Shaftesbury’s portfolio is within a 10-minute walk from the company’s West End office. Lane believes that this focus has attracted its large base of institutional investors; around 96% of the shares are owned by 70 institutions. The largest shareholder is CGNU with 8% followed by Co-operative Insurance Society with 7% and Prudential with 6%. Lane would also now like to use this focus as a selling point to attract a wider international investor base. “European investors understand a focused company. That’s where the understanding of Shaftesbury comes in,” says Lane. “We want to tap into tomorrow’s shareholders. We realise it is a multi-cultural investment scene. That’s why we’ve spent a couple of years tracking who actually owns the shares,” he says. This includes Kempen who owns stakes on behalf of the pension funds of clients such as Ahold. Part of the desire to increase the exposure has come from the consolidation of its traditional UK investors. The separate organisations of UK banks TSB and Lloyds and investment manager Hill Samuel owned a total of 21% of the company. With the three entities now merged, it has pared down its holdings to 4%. “As institutions merge, the number of investors are reducing but other people are coming to take an interest,” says Lane. “You have to make sure you have prepared the ground so others know about you. That is why Europe is so important.” The Carnaby estate, which it bought from Dutch company Wereldhave in 1998, represents 47% by value of Shaftesbury’s property assets. It comprises 105 shops, 34 restaurants, cafes and bars as well as 27,870m2 of offices and 41 flats. Shaftesbury has shifted the emphasis of the Carnaby estate from tourist-led retail to a youth fashion area and has attracted international retailers such as Diesel, Rifle, Carhartt and Stone Island. Lane says this mix appeals to European fund managers who have visited the area. “Fund managers see that their retailers are here,” he says. Its holdings in Covent Garden represent 23% of its assets with a combination of shops, restaurants and offices. It includes the specialist shopping centre the Thomas Neals Centre. Chinatown comprises 38 shops, flats and 6,038m2 of commercial space. The company describes its three main areas as villages and stresses the importance of encouraging innovative retailers. Its retail units provide around 35% of its income while its restaurants provide 25% and offices 35%. It looks to increase its holdings in key areas and since September 2000 it has bought £18.5m of property, including eight freehold properties in Chinatown. Shaftesbury has a refurbishment programme for its estates; it spent £10.25m in the 2000 financial year. Its programme has been feeding through to half-year pretax profits which to the end of March 2001 were up 42% to £4.91m from £3.45m for the same period last year. Earnings per share in this period rose 18% to 2.80p. Shaftesbury Pegasus House 37/43 Sackville Street London W1S 3DL Tel 44 20 7333 8188 Fax 44 20 7333 0660 shaftesbury@shaftesbury.co.uk Financial highlights Pretax profit in H1 2001 was up 42% on last year H1 2001 H2 2000 H1 2000 Gross rental income 15.82 14.43 12.88 Property outgoings (1.46) (1.53) (1.45) Net rental income 14.36 12.90 11.43 Pretax profit 4.91 5.38 3.97 Earnings per share 2.82 3.97 2.87 Source: Shaftesbury/HSBC