Allied bases its recovery on rentals

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The Independent Online
ALLIED London Properties has mothballed its housebuilding operations and will continue to sell off its landbank, if it can obtain reasonable prices.

The decision came after the company provided a further pounds 3.5m against housebuilding in the year to the end of June and reduced the capital employed in the division to pounds 10m from pounds 23m a year before and pounds 41m two years earlier.

Pre-tax profits recovered to pounds 1.49m from a loss of pounds 4.8m, helped by a 17 per cent increase in rental income to pounds 17.9m. The company is achieving some rent increases in its retail portfolio, heavily based in the South-east, after five-year reviews. In some cases it is not asking for increases, said Howard Stanton, managing director.

The company has not suffered any major tenant failures and voids are running at less than 10 per cent, he added. The property portfolio was valued at the end of June at pounds 173.8m, 8 per cent below the previous year's valuation.

The total dividend was maintained at 3.53p, paid largely out of reserves for the second year running. Mr Stanton said the company would be concentrating this year on keeping the dividend covered. There were cash balances of pounds 30m at the year end.

Allied London has investigated potential corporate property portfolios and individual property acquisitions. Last year it bought a 25 per cent interest in an office building in Manchester and a group of 11 investment properties from Grand Metropolitan pension funds.

The shares were unchanged at 43p.