While asset values are down, of course, rental income is robust and growing – by nearly 4% in the first half of the year.
"As we anticipated, the commercial property market has become more challenging in response to the credit crunch and slowing economies", says their statement. "However, Brixton continues to see good levels of rental growth from its activities and our financial strength, cost of debt (at 5%) and flexibility make us very competitive. Net rental income grew 13.5% and whilst profit before tax and non-adjusted earnings per share under IFRS reflect the downward valuation movements, investment profit – the true measure of recurring profit for a UK REIT – only marginally reduced, and would have increased (by 3%) if the surprise imposition of empty rates is ignored".
Brixton’s practice of owning assets where supply is constrained has clearly stood them in a good way for the present economy.
While rental income is strong, the outlook is uncertain, they say, quoting Bob Dylan with the lines "There must be some way out of here, Said the joker to the thief, There’s too much confusion,I can’t get no relief".
Development remains on hold – "We currently have no schemes on site and do not plan to commence any new developments in the second half of 2008".