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MARKET COMMENT
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Recently appointed to the FTSE 100, Liberty International (LSE: LII) is a business well worth investigating. The £1.8b property firm owns some of the best shopping centres in the land and, coupled with a long history of dividend improvements and a straight-talking boardroom, its shares are worthy of any blue chip portfolio. Today's full-year results from Liberty, owner of the Lakeside complex at Thurrock and the MetroCentre at Gateshead, showed just how lucrative shopping centres can be. Underlying profits before tax jumped 9% to £89m, aided by a 5% increase in net like-for-like rental income. Net asset value improved 4% to £2.6b, or 862p per share. The reason for Liberty's focus on shopping centres is simple: Limited competition, as the current UK planning regime restricts the number of rival centres springing up. No surprise then to find just 15 units empty out of the 1,417 available throughout Liberty's estate. Other factors that should reassure shareholders include the long leaseholds -- two-thirds of the rent comes from leases running for another eleven or more years -- and the traditional upwards-only rent review. Liberty also extended its run of dividend improvements, the payout for 2002 increasing by 4% to 23.75p per share. Since 1984, Liberty's dividend has risen over five-fold, representing yearly compound growth of nearly 10%. Over the past ten years though, dividend growth has been at a more sedate 7% per annum. At 558p, the shares offer a dividend yield of 4.3%. Hardly expensive, given the steady, proven income stream that supports the payout. There's another thing that should encourage prospective investors. Chairman Donald Gordon used today's statement to condemn the recent Higgs report on non-executives. Adjectives used to describe the corporate governance recommendations included 'unrealistic', 'impractical', 'absurd' and 'unhelpful'. Gordon's right. When his boardroom has demonstrably created shareholder value over time, why wrap it up in extra red tape?