Our central Asset Management team ensures we pro-actively manage our income producing portfolio to drive rental and capital growth; as at the end of May 2018, the annualised passing rent on our £692 million portfolio stood at £48.5m. Like-for-like rents increased 3.5% compared to the same period last year, with rental growth in industrial well ahead of retail, at 5.8% versus 0.4%.
We have started to rebalance our portfolio towards the industrial and logistics sector where we see greater long-term structural growth, selling our smaller assets and retail assets to reinvest into industrial and logistics development and housebuilding – two of the most attractive sectors in the UK property market.
This year we expect to sell between £150 – £175 million of smaller assets and retail assets, of which c. £70 million is already under offer. This builds on the good early progress we made in 2017, selling £27 million of small assets.
Reinvesting the proceeds from these sales means we can bring forward our commercial developments and our Asset Management team works closely with the Commercial Development teams to identify the industrial and logistics developments that we should keep for the retained income portfolio. Adjusted for investments and disposals, our income producing portfolio makes up 47% of our £1.5 billion portfolio value.
We will also reinvest the proceeds into bringing forward our residential land and housebuilding developments, firmly placing 90% of our business into strong, long-term growth sectors. This strategy will mark a seismic shift for St. Modwen, driving performance, significantly improving the returns we generate for the business from our retained income portfolio and cementing our future as the UK’s market leader.