Occupancy remains at high levels at Shaftesbury

Shaftesbury, the real estate investment trust focused on London's West End, said its tenants had a busy Christmas and New Year period and are rubbing their hands in anticipation of London being flooded with tourists during the 2012 Olympics and the Queen's jubilee celebrations.

"Within our portfolio, occupancy continues at historically high levels and demand is good for all uses," the company revealed.

The group said it is approaching a period when a number of retail leases in what it terms its "villages" are set to run out. Rather than worrying that the current difficult consumer environment could make it difficult for Shaftesbury to find new tenants the company reckons the potential increase in availability of shops to let will create opportunities for it to introduce new retailers and concepts, particularly around Carnaby Street and the Seven Dials areas.

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That optimism reflects the unique profile of London's West End, which is a popular shopping destination for wealthy tourists.

In the second half of the year the company will embark on two major projects in the Carnaby Street area to meet demand for larger shops, and this will give rise to a short term loss of income until the new space is let.

Demand for restaurant and leisure accommodation continues to be strong, Shaftesbury said, while demand for offices in London's theatre-land is currently healthy.

"Our apartments remain virtually fully let, and with sustained good demand, they re-let quickly as they become available. We have schemes in hand to create a further 29 apartments," Shaftesbury said.

The company is due to receive some money from its joint venture, Longmartin Properties, after which its bank borrowings will total £400m, giving the group access to £175m of untapped lending facilities.

After taking into account long-term interest hedging on £360m of bank debt, fixed at an average rate of 4.87%, the average all-in cost of Shaftesbury's bank debt will be 5.35%. Including the £61m debenture issue and its share of the Longmartin loan, total drawn debt will be £521m at an all-in cost of 5.55%. The earliest loan maturities are in 2016, Shaftesbury revealed.

As for this year's big events - the London Olympics, the Queen's Diamond Jubilee and not forgetting World Pride parade - Shaftesbury conceded that these will present many logistical and public safety challenges to an already busy and crowded city.

"This will lead to short term disruption to the usual patterns of life during the summer months. However these events will promote London and the West End to a global audience," the company said.

"We expect our portfolio, underpinned by the West End's unique features, will continue to deliver long term out-performance in income growth and capital values," the statement concluded.

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