Shares in Development Securities (DSC) rose 7 per cent after the property developer delivered a strong first-half performance that saw the previous half-year's pre-tax loss of £700,000 turned into a profit of £8.1m. Much of the improvement reflected a £12.1m realisation gain from the disposal of its Paddington site which generated a net gain of £6.4m. Accordingly, Peel Hunt has increased its full-year estimates on net asset value (NAV) by 1 per cent to 265p and adjusted EPS by 11 per cent to 9.3p.
Crucially, improving sentiment among investors in the property market helped valuations in the property portfolio to stabilise during the half-year period. Indeed, this contributed to a modest increase in the group's adjusted net asset value (NAV) to 262p.
Following the property realisations, unrestricted cash rose from £48m at the start of the year to £53m. Further realisations, notably £10m from the Manchester Arena sale and possibly the Edgware Road development, could boost cash resources to around £80m or one-third of the market capitalisation, according to analysts at Peel Hunt.
New real estate opportunities include an £8.2m option agreement on Algarve House, a derelict office building in Southwark, while in July it acquired Tollgate House and Market Place in Romford town centre for £8.3m.
