Shaftesbury’s net asset value has slipped by 0.9% amid declines in property held in its Longmartin joint venture.
The West End developer’s EPRA NAV per share stood at £9.82 in its full-year results to 30 September, down from £9.91.
Shaftesbury’s profit after tax fell by 85% over the year to £26m, down from £175.5m. EPRA earnings grew by 5.6% to £54.6m, and EPRA earnings per share increased by 4.1% to 17.8p. The main driver of this growth was a 4.5% increase in net property income to £98m.
The firm’s overall property valuation remained broadly flat, dipping by 0.6% to £4bn. Its wholly owned portfolio, 95% of the combined assets, fell by 0.2% to £3.8bn, with estimated rental value rising by £6m to £149.7m.
However, its Longmartin jv, which makes up 5% of the overall portfolio, declined in value by 8.5% to £209m. Its retail valuation plummeted by 19.4% amid a 14% fall in Long Acre high street retail ERVs as yields moved out by 25 basis points to 3.89%.
Longmartin Properties is a jv held between Shaftesbury and the Mercers Company.
Chief executive Brian Bickell said: “In a year dominated by domestic political uncertainties and a slowing national economy, the qualities of our portfolio, business model and proven strategy, together, have delivered a resilient performance.”
Bickell added that occupiers are increasingly preferring to operate from smaller spaces to reduce their overheads and rent commitments. He told EG: “We created big shops at Long Acre, that’s what the market wanted 15 years ago. We added in basements and first floors and some shops are around 9,000 sq ft. We don’t have big shops in our wholly owned portfolio. We will downsize those shops to the size people want. Valuers are a taking cautious view saying rents will come down. Our plan is to convert some first floors to offices and put in alternative uses in the basements such as more restaurants or residential.”
During the year, Shaftesbury completed schemes to repurpose or resize retail space across 49,000 sq ft, and has identified a further 23,000 sq ft, subject to planning consents.
Shaftesbury’s pipeline includes its plans for 72 Broadwick Street, W1. It has secured planning for the 65,300 sq ft building and begun works.
Shaftesbury remains in legal proceedings with shareholder Samuel Tak Lee. The proceedings concern allegations and claims relating to the equity placing conducted by the company in December 2017. Lee currently has an interest of approximately 26.32% of the firm’s share capital. He is seeking damages for alleged losses of around £10.4m. Shaftesbury’s board “considers the claims to have no merit and intends to defend the allegations robustly”. The legal process is expected to take place over the next 18 months.
A spokesperson for Mr Lee said: “Mr Lee believes that the directors of Shaftesbury pursued and conducted its December 2017 Placing with the improper purpose of ambushing him and diluting his interest in the company. Mr Lee’s primary objective from these legal proceedings is to secure a declaration from the Court that they acted in serious breach of their fiduciary duties. This is a case that will focus closely upon the way that Shaftesbury’s directors behaved.
“The matter is expected to be tried in 2021.”
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