Discipline in action

We like to operate with low levels of financial leverage and aim to maintain a loan to property value (LTV) ratio of between 10% and 40% depending on where we are in the cycle. Today, given the opaque macro-economic outlook, we are happy to operate at the lower end of this range.

We understand the value of our shareholders’ equity. We typically raise equity to buy assets when we see significant value in the property market but do not want to unduly increase our financial risk. Equally, we return equity when we consider that we have a surplus that we are unable to accretively deploy.

In December 2017, we exploited the continued strength in the investment market to sell 240 Blackfriars Road, SE1 and 30 Broadwick Street, W1 generating net proceeds of £306 million. The sales reduced LTV to around 7% and, with limited attractive opportunities to reinvest in the market, we returned the proceeds to shareholders via a B share scheme.

Together with the £110 million special dividend paid in May 2017, we have now returned £416 million to shareholders this cycle, in addition to ordinary dividends. At the same time, LTV remains low at 12% today giving us ample capacity for further investment both within our extensive 1.7 million sq ft development programme and in new opportunities as we unearth them.