Trading update

Shaftesbury PLC

Trading update

Strong operational metrics; valuation affected by investment market sentiment

Shaftesbury PLC today announces an update on portfolio valuation and vacancy ahead of releasing its preliminary results for the year ended 30 September 2022 on 29 November 2022.

Brian Bickell, Chief Executive, commented:

"The West End has enjoyed its first summer of trading unaffected by Covid restrictions since 2019, with strong domestic footfall and a rebound in international visitor numbers, which have continued into the first weeks of autumn. Our occupiers continue to report trading revenues, on average, above 2019 levels and demand for space in our carefully-curated, popular locations remains good across all uses, reflected in a return to pre-Covid occupancy levels and further growth in rental values.

The indicative wholly-owned portfolio valuation at 30 September 2022 shows a like-for-like decrease of circa 3.6% since 31 March 2022. Valuers have reported an outward shift in commercial valuation yields, due to the impact on investment market sentiment of globally-rising finance rates and the deterioration in the macroeconomic outlook. This has been partially offset by the continuing strong operational performance of our portfolio which reflects its exceptional qualities, appeal and long-term resilience."

Good leasing activity, scheme completions and further reduction in available-to-let space

Leasing activity remains good across all uses. Over the six months ended 30 September 2022, we concluded commercial lettings, renewals and rent reviews with a rental value of £15.8 million, and residential lettings totalling £6.2 million of income.

At 30 September 2022, the ERV of space held for, or under, refurbishment in the wholly-owned portfolio amounted to £12.1 million, representing 8.3% of portfolio ERV, down 1.0% since 1 April 2022. During the period, refurbishment schemes with a rental value of £4.8 million completed, of which 75% by rental value had been let by 30 September 2022, and new schemes with a rental value of £3.5 million were added to the pipeline. 

At 30 September 2022, EPRA vacancy had reduced to 4.0% of portfolio ERV (31.3.2022: 4.7%; 30.6.2022: 4.1%), of which 1.6% was under offer.

Available-to-let vacancy at 30 September 2022

1. Includes 5 shops let on a temporary basis with an ERV of £0.4 million (0.3% of portfolio ERV)

Space under offer at 30 September 2022

Portfolio valuation 30 September 2022

The indicative external valuation of the wholly-owned portfolio at 30 September 2022 was £3.2 billion, down from £3.3 billion over the period since 31 March 2022. On a like-for-like basis, taking into account acquisitions and capital expenditure, this represents a decrease of c. 3.6% over the second half of our financial year. Following a 7.5% increase in the six months to 31 March 2022, full year like-for-like valuation growth was 3.6%.

The decrease in the valuation since 31 March 2022 predominantly reflects an increase in yields, partly offset by ERV growth and an increase in annualised current income with continued improvement in occupancy levels.

Over the second half of our financial year, like-for-like ERV growth was 2.4% bringing growth for the year to 30 September 2022 to 9.0%. On a like-for-like basis, portfolio ERV has now recovered to 4.6% below pre-pandemic levels, with hospitality and leisure now just 5% lower and retail down 15% overall. Office and residential ERVs are now 3% and 11% higher respectively than those at 30 September 2019.

At 30 September 2022, our valuers reported a 25bps outward shift in yields for commercial uses to reflect the impact on investment market sentiment of globally rising finance rates and the deterioration in the macroeconomic outlook. With central London residential capital values showing relative resilience over the period, our apartments (representing 18% of our portfolio valuation) were down 0.6% over six months. Overall, the portfolio's equivalent yield increased 24 bps to 4.10% (31.3.22: 3.86%), which followed a contraction of 6 bps from 3.92% in the six months to 31 March 2022.

Acquisitions

Acquisitions during the second half of our financial year amounted to £35.7 million and comprised the purchase of a 200-year ungeared leasehold interest in the lower floors of 92-104 Berwick Street, Soho for £29.2 million (including purchase costs), as previously reported in May, and two further buildings in Berwick Street for £6.5 million (inclusive of costs).

1 November 2022

This announcement includes unaudited financial information in relation to the year ended 30 September 2022.

For further information:

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

Notes for editors

Shaftesbury is a Real Estate Investment Trust which invests exclusively in the liveliest parts of London's West End. Focused on hospitality and retail, our portfolio is clustered mainly in Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in East and West Covent Garden, Soho and Fitzrovia.

Extending to over 16 acres, the portfolio comprises c. 1.2 million sq. ft of restaurants, cafés, pubs and shops, 0.5 million sq. ft. of offices and 0.4m sq. ft. of apartments. All our properties are close to the main West End Underground stations, and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street.

In addition, we have a 50% interest in the Longmartin joint venture, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our purpose

Our purpose is to contribute to the success of London's West End by curating lively and thriving villages where people live, work and visit. Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. We have an experienced management team focused on delivering our long-term strategic objectives, ultimately to deliver a positive, long-lasting contribution to the West End.

Our values

The core values that are fundamental to our behaviour, decision making and the delivery both of our purpose and strategic objectives are: being human in how we operate, original in how we nurture talent and think, community minded in our approach to the West End, being responsible and long term in our approach to everything.

Forward-looking statements

This document, the latest Annual Report and Shaftesbury's website may contain certain "forward-looking statements" with respect to Shaftesbury PLC (the Company) and the Group's financial condition, results of its operations and business, and certain plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which the Group operates. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "should", "expects", "believes", "intends", "plans", "targets", "goal" or "estimates" or, in each case, their negative or other variations or comparable terminology.

Forward-looking statements are not guarantees of future performance. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many of these assumptions, risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely. There are a number of such factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Any forward-looking statements made by, or on behalf of, Shaftesbury PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except as required by its legal or statutory obligations, Shaftesbury PLC does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this document relating to Shaftesbury PLC or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance. Nothing contained in this document, the latest Annual Report or Shaftesbury's website should be construed as a profit forecast or an invitation to deal in the securities of the Company.

Ends