West End landlord Shaftesbury has swung back to profit as the capital’s retail heartland bounced back from Covid-19 disruption this year.
The landlord, which is set to merge with neighbouring property giant Capital and Counties next year, shared a £119.1m profit after tax in full-year results.
This was a strong come-back for the Carnaby, Seven Dials and Chinatown owner, which had posted a £194m loss in 2021.
Profit was buoyed due to a £99.5m revaluation gain and improved net property income as the shopping destination saw crowds of tourists and Londoners once more. It booked a £196.9m revaluation deficit in 2021.
Its occupiers reported spending ahead of pre-pandemic levels, with average sales for retail, hospitality and leisure businesses now six per cent ahead of 2019.
While London and the West End “cannot be immune from the unprecedented range of challenges which are now dominating the national outlook,” top boss Brian Bickell said “their long-term prospects remain bright.”
A £3.5bn merger between Shaftesbury and Capco would create a sprawling real estate empire across central London destinations including the Covent Garden estate and Carnaby St.
The proposed tie-up is now anticipated to take place during the first quarter of 2023.
The West End was “getting back on its feet quicker than anyone expected,” due to a strong recovery of international trade, boss Brian Bickell told CityA.M.
Bickell dubbed the government’s choice to not introduce VAT-free shopping as an “own goal”, saying it would encourage tourists to London.
However, a weak currency had meant it was “still cheap to come shopping here,” yet this was shifting slowly as it regained strength.
He was optimistic about the West End having a strong Christmas – but stressed if railway strikes went ahead then businesses would lose trade and jobs be left in the lurch.
Rail unions were “only looking out for themselves,” while “people’s jobs are at risk”, Bickell told CityA.M.
If West End firms were not able to reap the rewards of the Christmas shopping period next month, that trade will be “lost and gone forever,” he said.
It comes as city centres face a “downbeat” start to next year, as cash-strapped Brits pull back from discretionary spending after Christmas, he added.
Despite the company welcoming a footfall recovery, analysts noted Shaftesbury’s shares were “trading no higher than they did in 2006.”
“As a result, the shares stand at more than a 40 per cent discount to the stated net asset value (NAV) per share figure,” AJ Bell investment director Russ Mould, said.
“Technically, this means that investors can buy £1 worth of London property for less than 60p, but the market clearly fears that the combination of an economic downturn, the ongoing trend toward working from home post-COVID (at least for those that can) and competition from physical stores from online rivals mean asset valuations will remain under pressure,” he added.
The FTSE-250 firm’s shares were down one per cent when trading closed last night, around 41 per cent subdued on the year to date.