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Songbird First-Half Earnings Decline as Rental Income Falls

Sept. 22 (Bloomberg) -- Songbird Estates Plc, the company that controls the Canary Wharf financial district in east London, said first-half earnings fell on declining rental income following the sale of two buildings.

Pretax profit excluding changes in asset values and one-time items fell to 6.6 million pounds ($10 million) in the six months through June from 13.1 million pounds a year earlier, Songbird said today in a statement. Net rental income fell to 124.6 million pounds from 153.5 million pounds a year earlier after the sale of the former Lehman Brothers International headquarters at 25 Bank Street and 5 Churchill Place.

“In the London market, where supply of high quality Grade A space is still limited and the number of development completions is still relatively low, there remain opportunities for the group to add value and to maximize returns,” the London-based company said.

Songbird is expanding its focus to the City of London from Canary Wharf, the smaller of U.K. capital’s two financial districts. Songbird’s Canary Wharf Group unit is building a 37-story tower there known as the Walkie-Talkie along with Land Securities Group Plc. In July, it bought most of Royal Dutch Shell Plc’s London headquarters campus in a 300 million-pound joint venture with Qatari Diar Real Estate Investment Co.

Songbird fell less than 1 percent in London trading to 119 pence as of 9:58 a.m. The stock has declined about 16 percent this year, giving the company a market value of 910 million pounds.

Canary Wharf Dividend

Net income increased to 88 million pounds, or 11.7 pence a share, from 3.5 million pounds, or 0.5 pence. Net financing costs declined to 102.2 million pounds from 277.7 million pounds.

Songbird has a 69 percent stake in Canary Wharf Group, which owns 17 of the 35 buildings in the district and manages the other 18. The company will receive 31.2 million pounds from a Canary Wharf dividend declared yesterday.

The value of Songbird’s assets increased by 88 million pounds in the first half, compared with a gain of 177.6 million pounds a year earlier.

Footfall in the company’s retail properties increased by 3.3 percent and Songbird received approval for plans to add another 43,000 square feet of shopping space in Canary Wharf.

“A productive start to 2011 with a further extension of activity in central London and successful lettings/pre-lets at Canary Wharf has helped place the Group in a strong position to cope with macroeconomic uncertainty,” the company said.

To contact the reporters on this story: Chris Spillane in London at cspillane3@bloomberg.net; Ross Larsen in London at rlarsen2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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