Tue 26th Nov 2019 - Shaftesbury reports F&B tenants continuing to see turnover growth but cost pressures remain Shaftesbury reports F&B tenants continuing to see turnover growth but cost pressures remain: Shaftesbury, which is landlord to 315 pubs, restaurants and cafes in the West End, has reported its tenants, on average, are continuing to report turnover growth but cost pressures remain. The company saw net property income up 4.5% to £98.0m for the year ending 30 September 2019, compared with £93.8m the previous year, following a 4.9% like-for-like increase in rental income. Food, beverage and leisure now accounts for 38% of Shaftesbury's portfolio – up from 35% last year. The company stated: “The valuation of our wholly-owned portfolio was broadly flat, showing a like-for-like decline of just 0.2%. Our food, beverage and retail tenants are, on average, reporting year-on-year turnover growth. In common with businesses generally, cost pressure and staff shortages continue to present operational challenges. We have been largely unaffected by widely reported national retail and restaurant restructurings and failures, with tenant insolvencies during the year accounting for less than 2% of ERV. Where space has been handed back, it has re-let well. With robust footfall and trading in our locations, occupier demand has been stable throughout the year. Our 315 restaurants, cafes, pubs and bars are important drivers of footfall, dwell-time and trading in our villages and now account for 38% of our ERV, up from 27% ten years ago. Over that same period, the proportion of ERV from retail has fallen from 45% to 31%. During the year, we concluded lettings and rent reviews with a rental value of £9.9m for food, beverage and leisure tenants. These included Seven Dials Market, which opened in Thomas Neal's Warehouse, a 23,000 square foot Victorian warehouse in Seven Dials. The concept is an innovative hybrid, providing an exciting line-up of street food concepts with their first bricks and mortar space, a bar, bookshop and a market selling fresh produce. This has increased the casual food and beverage offer in Seven Dials, further improving this popular and distinctive village destination. In recent years we have also reduced the term of leases we grant and introduced more flexibility at expiry and, now, we include turnover-related rental top-ups, giving us the higher of market rent and a percentage of sales. This continues to provide a useful contribution to income and earnings. At 30 September 2019, the proportion of our restaurants under historical leases was 49% (2018: 54%) – more than a third of which are in Chinatown, providing us with further opportunities to add value and flexibility over the coming years.” Chief executive Brian Bickell said: “In a year dominated by domestic political uncertainties and a slowing national economy, the qualities of our portfolio, business model and proven strategy, together, have delivered a resilient performance.”