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St Modwen reviews portfolio, likely to sell Nine Elms

The post-referendum writedown now looks to have been overdone.
February 7, 2017

St Modwen Properties ' (SMP) new chief executive Mark Allan wasted no time initiating a review of the way forward for the property developer and housebuilder, and there has already been significant progress on major projects within the portfolio.

IC TIP: Buy at 329p

The Nine Elms Square part of the New Covent Garden Market site, which represents around 10 per cent of group net asset value, is under negotiation with a potential buyer at a level which is "firmly supportive of book value". Sentiment was badly affected immediately after the referendum, but has since improved. While the site suffered a 10 per cent writedown in the first half, this was just 2 per cent in the second half.

The group is also assessing its options on the 2,000 student rooms at Swansea: the two possible sales could generate around £200m cash profits, according to analysts at Peel Hunt.

Headline profits were lower as there was no repeat of the strong valuation uplift recorded this time last year. However, nearly half the portfolio generates rental income from 1,700 tenants, and this grew from £38.7m to £45.9m. On the residential side, St Modwen Homes saw profits up by nearly a half at £15.3m. Peel Hunt expects adjusted net asset value (NAV) of 476p at the year ending November 2017 (from 460p a year before).

ST MODWEN PROPERTIES (SMP)
ORD PRICE:329.4pMARKET VALUE:£731m
TOUCH:329.4-329.7p12-MONTH HIGH:359pLOW: 218p
DIVIDEND YIELD:1.8%TRADING PROPERTIES:£230m
DISCOUNT TO NAV:24% 
INVESTMENT PROP:£1.32bn*NET DEBT:54%

Year to 30 NovNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20122514721.33.6
20132798133.54
201432513253.84.6
201541423597.95.75
20164316724.16
% change+4-72-75+4

Ex-div: 9 Mar

Payment: 4 Apr

*Includes joint ventures