Slough warns of slow rental growth

TOM STEVENSON

Deputy City Editor

Slough Estates, the industrial property landlord and the UK's fifth- largest property company, said yesterday that commercial property rents had finally stabilised, but warned that any rises in rental values as the economy picked up would be slow to show in earnings.

Sir Nigel Mobbs, chairman, said: "As corporate expansion plans resume, we can expect good growth in rents for quality, well-located properties. However, it will take time for market improvements to be translated into significant earnings growth."

His comments highlighted a problem affecting companies thoughout the property sector, which have been protected from falling rents by the UK's system of upward-only rent reviews but are now paying the price. Upward- only reviews can mean tenants pay higher rents than would be achievable in the market, but they also slow landlords' profits growth when the market picks up again.

In the six months to June, Slough's pre-tax profits slipped to pounds 32.8m from pounds 33.3m, despite a 7 per cent rise in investment income. Acquisitions during 1994 added more than half the increase. Earnings per share increased from 4.5p to 4.9p and the interim dividend was maintained at 3.1p.

Although the held payout was expected, Slough's shares closed 5p lower at 218p, at which level they have fallen by almost a third from last year's peak of 313p.

During that period, in line with the unfashionable property sector, they have underperformed the rest of the market by 30 per cent as the market focused on the likelihood of a slowly rising dividend for several years to come.

Slough does not revalue its properties at the half-way stage, so there was no indication yesterday of the discount to the company's underlying worth at which its shares are trading. Six months ago, Slough disappointed the market with a 2.6 per cent increase in net asset value from 269p to 276p.

Despite a sluggish investment market as institutions continued to shun commercial property, Sir Nigel said it had received a number of inquiries for design and building work. It was also undertaking a limited number of speculative industrial buildings.

Earlier this week Slough received a formal commitment from the John Lewis partnership to take the anchor tenancy at a proposed pounds 150m shopping centre in Glasgow, which the company is developing with AMP Asset Management.

AMP joined forces with Slough after Grosvenor Square Properties, the property arm of Associated British Ports, pulled out of the 600,000 sq ft venture, which as well as the John Lewis store will include parking for 2,000 cars - one of the country's largest city centre car parks.

The scheme, Buchanan Galleries, was acquired with the purchase of Bredero Estates, the company brought down by the ambitious redevelopment of Hammersmith Broadway in west London. Completion is planned for 1999.

Travel
travel
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
Sport
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
News
Morrissey pictured in 2013
people
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Travel
travel
News
Robyn Lawley
people
News
people
News
i100  ... he was into holy war way before it was on trend
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
News
people
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Life and Style
lifeDon't get caught up on climaxing
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star