Slough Estates to spend pounds 170m on projects

Britain's largest industrial landlord, Slough Estates, reported a 7 per cent rise in its net assets per share during 1996, driven by a strong performance from its core UK properties. As a reflection of the buoyant conditions, especially in Slough's Thames Valley heartland, Sir Nigel Mobbs, chairman, said the company was embarking on a pounds 170m development programme.

Net assets per share, the key measure for a property company, rose from 267p to 285p during the year, ahead of analysts' expectations. Slough said strong growth in the economy was driving demand for manufacturing sites and warehouses.

Sir Nigel said: "1996 has been a positive year with increases in both earnings and net assets per share. We enter 1997 with confidence."

The strongest growth was in the UK portfolio, which had asset growth of 4.8 per cent, much of it coming in the second half of the year. "That has grown more than the rest because 60 per cent of our UK portfolio is located in the buoyant Thames Valley area," Sir Nigel said.

The overseas portfolio saw strong performance in the US and recovery in Canada. The NAV per share would have grown 4p more had it not been for the strong appreciation of sterling, the company said.

Borrowings fell to pounds 689m from pounds 791.5m previously, which helped to boost the NAV per share. The company said occupancy for the year was 94.5 per cent, unchanged from a year earlier.

Justifying Slough's decision to accelerate its development programme, Sir Nigel said: "Improving business conditions, particularly in the UK, have resulted in better sentiment towards property investment. These conditions are evidenced by stronger occupancy, a resumption of rental growth and increasing property values. Demand from users has absorbed the available stock of good- quality property and conditions are now favouring selective new development."

During 1996 core pre-tax profits rose by pounds 10.3m, 18 per cent, to pounds 67.5m, despite an unfavourable exchange rate effect of pounds 1.7m.

After a resumption of rental growth, the level of over-renting in Slough's UK portfolio - properties paying a higher level of rent than the prevailing market rate and so offering no potential growth - decreased from 7.8 per cent to 3.4 per cent.