James Smith Estates (JSE) has reported a marginal increase in NAV and a dip in profits of 3.5%.
The small quoted investment and development company, which has a portfolio of shops, offices, sheds and homes across London and the South East, said NAV per share for the six months to 24 September was up by just 2.5% to 422p.
Pre-tax profits dipped by 3.5% to £3.2m (2003: £3.3m).
JSE said profits had dipped because of the effect of sales made in the previous year and the expiry of leases on property held for development, which had combined to produce a 10% reduction in rents to £3.4m (2003: £3.8m)
Turnover for the period jumped 35% to £6.25m, up from £4.06m for the same period a year earlier.
Chairman Stephen Mulliner said: “The investment market has continued in confident mood over the past six months, fuelled by rising expectations of rental growth, with the result that there has been further downward pressure on investment yields.”
He added: “The recovery in occupational markets has continued but we remain of the view that, in many sectors, optimism about rental growth prospects is overdone.
“Even so, we expect prevailing yields to be maintained as investors seem likely to accept lower total returns from real estate in the absence of more attractive opportunities from other asset classes.”
Mulliner said that JSE was confident in the strength of its business despite the drop in profits and reduction in rental income, but conceded that the “business of making money from commercial property without taking excessive risk” had become significantly more challenging.
References: EGi News 12/11/04
