TR Property anticipates lower earnings in current year

28th May 2014 07:59

Invesment company TR Property on Wednesday warned that it anticipates lower earnings for the year to March 2015 as a result of a short term reduction to its property portfolio due to development activity at the Colonnades.Despite this, the group proposed a final dividend payment for the 12 months ended March 31st of 4.6p, 5.7% ahead of the previous year, bringing the total payment to 7.45p (2013: 7.00p)."The fall in rental income is expected to be temporary, so although earnings may fall in the short term, providing the board is able to see earnings support in the longer term, we will be prepared to utilise some of the reserves the company has, therefore we anticipate being able to maintain a small progression in the dividend," Chairperson Caroline Burton explained. The group described its year-on-year revenue growth as "encouraging", although it said some of the timing changes that have led to an increase in earnings for the year will not be repeated in the 2015 financial year. The net asset value per share for the 12-month period rose from 215.25p to 254.94p, while gearing began the year at 9.6% and ended at 14%. The group said economic fundamentals across Europe had been more favourable for real estate than at any time in the last six years, explaining that the return to growth experienced in the UK, Scandinavia and Germany was now feeding into tenant demand and rental growth. Burton continued: "[Our managers] remain positive towards those markets where rents are responding to tenant demand even though many share prices are standing at, or in excess of, historic asset values and they remain confident about the inherent growth in these well managed businesses. "They remain positive on the economic outlook in the UK and alongside the activity in the existing UK physical portfolio they have been seeking to selectively increase the physical exposure focusing."She added that the board's concern lay with the "exuberance of investors where underlying tenant demand remains fragile". "With fixed income returns looking increasingly unappealing capital is seeking alternatives such as commercial property. However, rapid asset value inflation may lead to poorer than expected returns in the medium term if the anticipated economic improvement does not translate into growth and jobs."The share price dropped 0.38% to 259p by 08:28.NR