Headline figures for Development Securities (DSC) fail to reflect the solid progress achieved in the first half. After adjusting for one-off items, pre-tax profits more than doubled to £18m. That was driven by development and trading gains of £18.2m, up from £13.3m a year earlier, as well as an improving outlook for regional property, which helped turn last year's £1m portfolio devaluation into a £4.2m uplift.
The group also realised gains on a number of properties: a mixed-use site in Romford acquired for £8.3m was sold for £12.3m, while another part of the North London office portfolio was sold for a profit of £6.2m. Tenants were found for a 110,000 sq ft office development in Hammersmith. As finance director Marcus Shepherd pointed out, initial rental estimates centred on £43 per sq ft, but by completion of the project a year later this had risen to £49.
Restricting its own equity investment in any single deal to just £10m, the group has been busy raising capital through joint ventures. At Harwell, development of a 700-acre site is proceeding with JV partner Prorsus and two government-backed research agencies, while in partnership with Propium Capital Partners the company bought a 146,000 sq ft office building in Waterloo for £87m.
Analysts at Barclays expect adjusted net asset value per share of 288p at the February year-end (from 269p in 2014).
DEVELOPMENT SECURITIES (DSC) | ||||
---|---|---|---|---|
ORD PRICE: | 183p | MARKET VALUE: | £228m | |
TOUCH: | 183-185p | 12-MONTH HIGH: | 269p | LOW: 179p |
DIVIDEND YIELD: | 3.1% | TRADING PROPERTIES: | £237m | |
DISCOUNT TO NAV: | 32% | |||
INVESTMENT PROP: | £221m* | NET DEBT: | 45% |
Half-year to 31 Aug | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 255 | 8.1 | 5.9 | 2.4 |
2014 | 269 | 7.4 | 6.7 | 2.4 |
% change | +5 | -9 | +14 | - |
Ex-div:30 Oct Payment:27 Nov *Includes £36.8m within joint ventures |