UK property market puts Liberty International under pressure

Posted On Thursday, 07 August 2008 02:00 Published by eProp Commercial Property News
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A UK market has put pressure on Liberty International, with the property group reporting no growth in its dividends for six months to June.

Patrick BurgessA Struggling UK market has put pressure on Liberty International, with the London based property group reporting no growth in its dividends for the six months to June.

The company, which has a significant South African shareholding, declared a dividend of 16,5p a share.

But chairman Patrick Burgess said Liberty International had demonstrated its resilience “based on our quality assets, sound financial structure and active asset management approach, notwithstanding that the first half of 2008 has been a difficult period for the UK property sector”.

The company, which specialises in prime UK shopping centres, recorded a further 7,4% fall in investment property valuations in the first half.

Net asset value a share had also declined from 1264p to 1095p.

“The property cycle has to run its course with excesses of the boom years to be purged from the system.

Property values are unlikely to recover until stability returns to the banking sector and therefore we consider the process of falling property values is not yet complete,” Burgess said.

Speaking from London, CE David Fischel said there had been an increase of £4,5m in bad debt provision.

“Where we have tenants who are in administration we’ve made a provision for any outstanding balances.”

He said 62 tenancies went into administration over the period, which accounted for about 3% of the group’s tenants.

Fischel said one of the good features of the company was that its development programme was “moderate in size” at £280m, compared with the size of the company.

Liberty International has a market capitalisation of £3,3bn and gross property assets of £8bn.

The company’s two largest development projects were “high-quality shopping centre projects”, one in Cardiff, the other in Newcastle. “In both cases, we are making steady progress on letting.”

Evan Jankelowitz, co-head of Stanlib Property Franchise, said earnings were worse than expected as was the drop in net asset value. “However, looking at the circumstances in the UK with consumer sentiment at all time lows and the tight lending market putting pressure on capital values, they were resilient.”

Leon Allison, property analyst at Macquarie First South, said the results were “somewhat disappointing”, but “at least the dividend was maintained”.

Last modified on Monday, 21 April 2014 12:22

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