Slough on the road to recovery

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SLOUGH Estates, the UK's fifth-largest property company, yesterday added its voice to those claiming a noticeable upturn in the market this year, writes Tom Stevenson.

Sir Nigel Mobbs, chairman, said the company was planning a return to development of its largely industrial portfolio 'in response to improving demand'.

In March Slough was the first of several property companies to tap the stock market for funds on a wave of rising share prices and increasing optimism in the sector.

Sir Nigel said signs of recovery had continued, 'with an encouraging improvement in the level of completed lettings and inquiries for space'. This had offset continuing defaults from failed tenants, leading to a marginal increase in occupancy rates to 89.5 per cent.

Pre-tax profits during the first six months of the year fell 35 per cent to pounds 28.8m, largely due to a doubling in the interest charge from pounds 14.8m to pounds 28.4 after a change of policy on the capitalisation of interest payments.

Operating profits were 13 per cent higher at pounds 55.2m, earnings per share emerged at 4.4p (6.5p), and the interim dividend was maintained at 3.1p following last year's cut.

Slough's shares closed 1p lower at 241p yesterday, having tripled in value since last September. Net assets per share are expected to end the year at about 250p.