Manchester Ship bolsters Peel

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PEEL HOLDINGS, the property company controlled by John Whittaker, is reaping the benefits of the acquisition of 68 per cent of Manchester Ship Canal from Mr Whittaker.

Peel acquired Manchester Ship through a pounds 79m cash and share deal last May, to prevent a breach of banking covenants by reducing the proportion of debt to shareholders' funds.

Net debt at 31 March was pounds 335.1m, slightly above the previous year. The group intends to cut it to pounds 310m. Gearing fell from 132.7 per cent to 110.7 per cent.

Manchester Ship contributed pounds 7.6m to profits after financing costs, giving Peel pre-tax profits of pounds 7m compared with an pounds 8.5m loss last time. Net asset value rose 5.9 per cent to 306p, helped by the pounds 148.8m of assets acquired with Manchester Ship.

A directors' valuation of the property portfolio at 31 March concluded that the value had fallen 0.9 per cent to pounds 491m compared with the external valuation carried out last year.

Earnings per share were 8.12p compared with a 5.7p loss and the dividend is held at 3p via a 2p final. The shares rose 9p to 124p.

Meanwhile, Associated British Ports has warned that it will write down its pounds 127m development portfolio by about pounds 10m in its figures for the six months to June. Its shares fell 26p to 320p.

The warning followed the letting of its 70,000 square foot development in Bracknell, Berkshire, to Novell UK, a subsidiary of the US software company.

The deal underlined the difficulty of finding tenants in current markets. The 25-year lease allows a break after the first five years - among the first deals of its kind - and Novell is being granted a rent-free period, although ABP would not say for how long.

ABP would not say how much of the write-down was attributable to the Bracknell development. Last year, the group wrote pounds 29.7m off its portfolio.

Sir Keith Stuart said the group intended to sell the property when the market improved. He admitted that the break clause would make the property less attractive to institutional investors, but said Novell intended to spend a 'substantial amount' fitting out the building.

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