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Max Property plays waiting game

Aim-traded opportunity fund Max Property has had a quiet spell but is now gearing up for more acquisitions.
May 28, 2012

Opportunity fund Max Property is facing diminishing returns. After a well-timed launch three years ago and some very profitable early deals, it generated a total return of just 3.4 per cent over the 12 months to 31 March 2012. Just under 12p a share of net rental income was offset by 2.7p of running costs, 4.2p of debt-servicing costs, 0.4p of tax and 1.4p of property write-downs.

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Max bought just one property during the year, albeit a very large one – St Katherine Docks marina next to Tower Bridge. Otherwise the fund’s managers at Prestbury Investments have been biding their time. “The risks are all macro, which we can’t control,” laments Prestbury chief executive Mike Brown. “So we’re trying to find strategies to make each-way bets.”

Recently this has involved taking on £32m of mezzanine debt, which is secured against five high-yielding regional offices worth £40m. At 9 per cent, the interest rate on the debt is pricy, but it caps Max’s exposure to a risky portfolio at £8m while also increasing its war-chest for acquisitions to about £90m.

Brokerage Peel Hunt expects adjusted NAV to rise from 133p to 140p by March 2013.