West End landlord Shaftesbury has said rising interest rates and a deteriorating economic outlook dented market sentiment in the second half, pushing down the valuation of its properties and restraining its post-pandemic recovery.
The group’s portfolio, which owns 16 acres in the area of central London, rose over the year to the end of September, from £3bn to £3.2bn, it said in a financial earnings report on Tuesday. In the first half of that period, the like-for-like increase was 7.5 per cent, but that was followed by a 3.6 per cent decrease in the second.
“The portfolio valuation grew in the year, but first-half gains were partly reversed in the second half as valuation yields increased in response to globally rising finance rates and the deterioration in the macroeconomic outlook,” Shaftesbury said.
In the results statement, chief executive Brian Bickell hailed the “rapid rebound” in the West End economy as the coronavirus crisis has abated, with rent collection back to pre-pandemic levels, at 99 per cent. Net property income was up more than a quarter at £83mn for the year.
A merger with Covent Garden owner Capco has been approved by both companies’ shareholders. Discussions continue with competition authorities and the deal is expected to close in the first quarter of next year.