Property developer Terrace Hill has made decent progress with its pipeline of supermarket projects. It expects planning consent next month on its sites in Sunderland and Whitchurch, both of which are pre-let to Sainsbury, and has reached pre-letting agreements on two further schemes. Demand for food retailing has held up even as other areas of the High Street have suffered, so these schemes should prove profitable. The problem is knowing when - chief executive Philip Leech admits the timing is "hard to predict".
None of this was reflected in the half-year results, however, which were marred by asset sales in its residential property joint venture. The company had been hoping to turn the portfolio into a unitised fund with the help of insurance giant Aegon, but demand for such a product turned out to be thinner than expected, forcing Terrace Hill to repay a tranche of bank debt by selling assets quickly, for £5.1m less than book value.
The debt profile was also improved by the sale of a large London office building in Victoria for £26.8m, and gearing now looks comfortable. Meanwhile, it is building a mixed-use development at another Victoria site, alongside a joint venture partner, with plans to launch into the booming west end office market in 2012-13.
House broker Oriel Securities expects full-year adjusted net asset value of 41p (48p in 2010).
TERRACE HILL (THG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 23p | MARKET VALUE: | £48m | |
| TOUCH: | 22-24p | 12M HIGH / LOW | 27p | 16p |
| DIVIDEND YIELD: | NIL | TRADING STOCK: | nil | |
| DISCOUNT TO NAV: | 41% | |||
| INVEST PROPERTIES: | £30.9m | NET DEBT: | 64% | |
| Half-year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010* | 37.0 | 0.66 | 0.10 | NIL |
| 2011 | 39.0 | -1.22 | -0.83 | NIL |
| % change | +5 | - | - | - |
*Half-year to 30 April | ||||
