O Twelve Estates narrows interim losses

East London property investor O Twelve Estates narrowed half year losses and said it is confident of withstanding the continuing uncertain economic environment despite its ongoing debt challenges.

The heavily indebted firm said loss before taxation reduced to £3.7m for the six months ended 30 September 2011 compared to a loss of £5.8m before.

A significant contributor to the loss was the adverse movement in the mark to market of interest rate swaps of £3.4m, the group explained.

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Total income increased to £7.1m from £6.9m the year before. Net asset value per ordinary share was 7.56p, up from 6.18p at 30 September 2010. The group reported contracted annual rental income of £11.6m with an estimated rental value of £13.5m per annum.

Loss per share narrowed to 0.78 pence from a loss of 4.78p per share in the previous year. Portfolio valuation rose 0.3% on a like-for-like basis.

Commenting on the results chairman Phillip Rhodes said, "Whilst the group's debt position presents ongoing challenges, the current loan terms and relatively high gearing would be very difficult to achieve for a new borrower today and, as a result of our leveraged position, any growth in capital values over the next few years will enhance shareholder returns significantly."

Looking ahead the group noted the occupational market is certain to remain challenging for the near term as the government reduces the budget deficit and as the eurozone debt crisis persists.

"The focus of the portfolio in the London/South East area generally and on the "Olympic" side of London in particular should mitigate the impact if there is a prolonged period of economic stagnation," the group said.