London West End real estate investor Shaftesbury (SHB) fell 3.9% to 527.5p as it swung to a big full-year loss as Covid had a devastating impact on rental income and led to a big fall in the valuation of its portfolio.

Net losses for the year through September amounted to £699.5 million, compared to a profit of £26 million year-on-year.

Net property income dropped 24% to £74.3 million owing to a 3.5% like-for-like decrease in rental income and charges for expected credit losses and impairments of £21.9 million.

Shaftesbury did not declare any dividends for the year, in line with previous guidance. The company completed a heavily discounted £300 million fundraise in October and secured covenant waivers from lenders to help it survive the current disruption.

Looking forward, the company said it expected Covid-19 control measures to likely be in place for much of 2021, though with the impact reducing as conditions improved.

A LONGER-TERM IMPACT?

AJ Bell investment director Russ Mould commented: ‘Unlike some other parts of the real estate market it’s hard to see a swift recovery in valuations and rental income for Shaftesbury because of the reliance of that part of London on tourism.

‘Even in the most optimistic ‘reopening’ scenario, international travel at scale could be one of the last things to make a comeback. Global roll-out of a vaccine could be patchy and different countries could face very different experiences with the pandemic next year.’

Numis analyst Poonam Lodhia said: ‘While the operationalisation of a Covid vaccine in 2021 is likely to result in a rebound in footfall, it remains unclear whether sales densities will recover to pre-Covid levels, particularly if the pandemic has resulted in a more structural change to consumer behaviour and occupier requirements.’

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Issue Date: 15 Dec 2020