Shaftesbury upbeat as West End strength continues
today May 21, 2019
Shaftesbury, the property giant that controls large parts of Covent Garden, Seven Dials, and Carnaby, posted falling net profits on Tuesday. But it remained positive and said that London's West End overall continues to be a major draw for UK and international shoppers.
In the six months ending March 31, its net property income actually rose 5.2%, but its profits after tax fell 68.7% to £38.7 million due to a “lower combined net revaluation surplus in the current period”.
The company said that its business remained resilient and CEO Brian Bickell said the performance “demonstrates both the exceptional qualities of our portfolio, located in the heart of London’s West End, and our proven long-term strategy.”
And he added that while “macro uncertainties are likely to dominate the national mood for some time to come, we believe the medium to long-term outlook for London and the West End remains strongly positive, driven by their international appeal, broad economic base and dynamism.”
He did acknowledge that “the uncertainty over the timing and terms of Brexit, structural changes in traditional shopping patterns and subdued national consumer spending continue to impact business investment and strategy, leading to caution by occupiers in taking on new commitments.”
However, Shaftesbury’s locations, “which benefit from the West End's international profile and its broad, more affluent visitor base, footfall and spending continue to be resilient.” And he said that where the company collects data, “occupiers are, on average, continuing to report year-on-year turnover growth.”
The company exercises careful control over which tenants it allows in its properties and it said this long-term curation of its high footfall locations, together with the “relative affordability” of its rents, “are important reasons why occupiers are keen to secure or retain space in our areas.”
And it’s also in the fortunate position of its exposure to struggling national retail and restaurant chains being limited. Retail tenant failures during the year to date have represented less than 1% of portfolio rental value, and where it has been handed back space, it’s “seeing good occupier interest at current rental levels.”
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