Property giant Hammerson – one of the three firms behind Birmingham's Bullring shopping centre – has seen its net asset value rise 21.3 per cent in the last year.
The firm, which on January 1 converted to a tax efficient Real Estate Investment Trust (REIT), said it had made a #101 million tax provision to make the change, adding that the conversion would help it increase its dividend this year after it raised it ten per cent to 21.68 pence for 2006.
"The company now has major tax-exempt businesses both in the UK and France. Rental income is projected to show substantial growth in 2007, with continued growth thereafter."
"The board expects to be able to recommend an increase of around 25 per cent in the total dividend for 2007," the firm said.
Finance director Simon Melliss said Hammerson expected annual dividend growth to settle back to six to eight per cent after this year.
"After 2007 we would expect dividend growth to be in line with that which we have seen in the last five years which is about 7.5 to eight per cent, that sort of level."
Analysts were also buoyed by the likelihood of the firm raising its office and retail rental charges.
"Management sounds pretty upbeat and foresees rental growth in all of its markets, ie for prime UK retail, London offices and Paris offices," said analysts at JP Morgan.
Hammerson, Britain's fourth-largest property firm by market value, said adjusted NAV per share was 1,500 pence at the end of December, up from 1,237p a year ago and 1,389p at the end of June 2006.
That compares with an average forecast of 1,487p given in a survey of ten analysts.
Shares in the firm, which have risen around 45 per cent in the last year following a strong run by the property sector, rose one per cent to 1,634 pence following the update, valuing the business at around #4.6 billion.
Hammerson, which specialises in high-quality retail and office developments, has nearly three-quarters of its property in Britain, one quarter in France and a small portion in Germany.
Hammerson added it had 21 potential developments at the planning stage and had extended its development pipeline to #900 million. It said it had up to #5 billion to spend on acquisitions and new projects over the next decade.
Mr Melliss said the company expected to sell off about #400 million of its properties this year after offloading around #600 million in 2006.
"I would say it should continue with the level we have seen in the last few years. About #400 million."
Chief executive John Richards said the firm also expected to see a good performance from its French business, although it was difficult to find retail parks and shopping centres in France that were for sale.
"It's very, very difficult in France. There's been very little stock on the market in retail."
Citigroup reiterated its 'buy' stance on the group, as it cheered the group's development pipeline, which it said is one of the strongest in the sector.
The broker also noted the outlook was "markedly less cautious" than that of peers, adding that the 25 per cent expected increase in next year's dividend was a positive.