MEPC shares rise as payout is maintained

SHARES in MEPC, Britain's second- largest property company, rose 5p to 455p after it maintained its interim dividend at 5.25p, writes Tom Stevenson.

The market was relieved that the payout, uncovered by earnings since 1992, was not cut. Having tapped shareholders for pounds 222m last year through a rights issue, MEPC is expected to maintain the full-year payout at 20p, offering an above-average yield of 5.5 per cent.

The shares have fallen a fifth since the beginning of the year, pushing them below forecasts of the underlying value of the company's net assets at the year-end of 514p, up from 416p last time.

James Tuckey, chief executive, warned that rents had hardly moved in the first six months. Despite the strength of the investor market, finding occupiers for MEPC's predominantly office portfolio was still tough.

Income edged up from pounds 108.6m to pounds 112.6m, but higher finance costs wiped out gains on investment disposals to leave profits only 9 per cent higher at pounds 47.6m. Earnings per share rose from 7.8p to 8.3p.

During the first half MEPC acquired two regional shopping centres in the US, one of which, in California, was almost immediately damaged by the recent earthquake in the state.