21st May 2015 09:44
LONDON (Alliance News) - The Local Shopping REIT PLC saw its shares slide Thursday morning after it reported lower comparative profit for the first half of its financial year, admitting that the retail sector, particularly the non-prime sector, was largely being ignored by the huge investment flows that was causing a boom elsewhere in the UK commercial property sector.
The real estate investment trust reported a pretax profit of GBP108,000 for the six months to end-March, down from GBP1.8 million a year earlier, reflecting a GBP2.7 million decrease in the fair value of its property portfolio to GBP84.9 million. This reflected lower like-for-like property values as well as a reduction due to individual property sales.
The company sold two property-holding subsidiaries last August, reducing its overall portfolio by 235 properties and its net rental income by GBP7.1 million. The portfolio achieved gross rental income of GBP4.0 million for the six months to March 31, down from GBP7.7 million a year earlier prior to the sale of the assets.
Recurring profit was GBP0.4 million, down from GBP0.9 million a year earlier.
"The UK Investment market has strengthened since mid-2012 with both improved pricing and an increasing number of transactions. This momentum has varied between the sectors, with the market for retail investments being the most subdued, and this has been particularly felt in local shopping assets in secondary, tertiary and non-core locations," the trust said.
"Whilst other sectors have experienced a surge in demand from overseas and domestic institutional capital, local shopping has been largely ignored. Good quality shopping assets continue to sell well at auction, particularly when located in attractive towns or larger cities, but there is little investor appetite for lesser quality stock," it added.
Local Shopping REIT shares were down 7.2% at 28.88 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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