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Quintain hit by residential property fears

Property regenerator Quintain Estates has taken a 5 per cent writedown on the value of its property portfolio, as fears surrounding residential property values in Wembley and Greenwich take hold.

More than half of the valuation deficit came from a £34.5m write down on its Corsham Street scheme, which was sold at cost to Quintain's iQ student accommodation fund. However, the valuation of its key Wembley mixed use development fell 2.7 per cent reflecting lower growth expectations for residential values. In the period, £8.8m of residential sales were agreed at Wembley City, the designer outlet centre is already 25 per cent pre-let and a £10m land sale was made to Brent Council.

At Greenwich, Quintain's other major regeneration project, values dipped by 1.6 per cent in the period, driven by a similar sentiment. Overall, the group made sales of £63.5m, including the Pier Walk office building in Greenwich, at a 6 per cent premium to its last valuation.

Two significant banking facilities have been extended, and the group's fund management business is performing well, generating net fees of £3m. Quintain has also agreed a €24m (£20m) two-year deal to advise Living PlanIT, a green building specialist.

Broker Matrix downgraded its full-year net asset value (NAV) forecast from 123p to 117p to allow for an expected decline in secondary property values.

QUINTAIN ESTATES (QED)
ORD PRICE:36pMARKET VALUE:£187m
TOUCH:36-37p12 MONTH HIGH:70pLOW: 36p
DIVIDEND YIELD:nilTRADING STOCK:£26.9m
DISCOUNT TO NAV:68%
INVEST PROPERTIES:£777mNET DEBT:72%

Half year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20091239.62.8nil
2010112-58.8-8.7nil
% change-9 - - -

Click for a guide to the terms used in IC results tables.

IC View

Quintain's shares trade 69 per cent below Matrix's downgraded NAV estimate. The shares are out of favour, but with credit lines being extended investors taking a medium-term outlook should be rewarded. Good value.

LAST IC VIEW: Good value, 48.5p 03 Jun 2010

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