Opportunity fund Max Property (MAX) has - temporarily at least - fallen victim to the weak property market that it was set up to take advantage of. Adjusted net asset value (NAV) grew just 0.5 per cent to 134.1p over the six months as property writedowns offset recurring profits.
The portfolio as a whole was revalued down 1 per cent over the period, but that masked substantial divergences in performance. The London assets - various buildings around St Katherine Docks just east of the City and a portfolio of pubs let to Enterprise Inns - were both marked up. But the regional portfolio, which is dominated by high-yielding industrial estates, fell.
That explains why Max is focusing its remaining firepower on the capital. Mike Brown, chief executive of Max's management company, Prestbury, says it's not just regional retail that is in structural oversupply: regional offices - many of which were developed during the late 1980s boom - also face imminent lease expiries, with rents too low to justify refurbishment. Max's latest London deal was the purchase of a whole block on High Holborn for £45.3m, concluded this month. It was held for redevelopment on short-term leases by an Irish company that ran out of money. Max plans to give the estate a discreet makeover - converting some listed buildings back to residential and upgrading the retail space.
Broker Peel Hunt expects adjusted NAV of 140.3p for 2013.
MAX PROPERTY (MAX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 108p | MARKET VALUE: | £238m | |
| TOUCH: | 108-112p | 12M HIGH / LOW | 113p | 89p |
| DIVIDEND YIELD: | nil | TRADING PROP: | £0.86m | |
| DISCOUNT TO NAV: | 18% | |||
| INVESTMENT PROP: | £464m* | NET DEBT: | 38%* | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 129 | 4.96 | 2.00 | nil |
| 2012 | 131 | 1.42 | 0.80 | nil |
| % change | +2 | -71 | -60 | - |
*Including share of joint ventures | ||||
