Property vulture fund Max Property (MAX) posted a meagre 2.3 per cent gain in book value for the year to 31 March. Yet the second half was much stronger than the first, and the vehicle’s managers at Prestbury Investments are strikingly upbeat about their market after a tough couple of years.
Prestbury's chief executive Mike Brown notes the remarkable performance of junk bonds over the past half year as investors have flocked to anything with yield - except provincial UK property. Now that bank debt is once again available for secondary assets with sustainable rental income, he thinks "the market is at an inflection point".
Max’s exposure to the secondary property market is largely in the form of Industrious, a £190m portfolio of industrial estates that accounts for a third of the fund. The company recently refinanced part of the debt backing Industrious with Santander - a deal Mr Brown says would not have been possible 12-18 months ago.
Industrious fell 3.5 per cent in value over the year despite a three percentage point reduction in the vacancy rate to 12.2 per cent. That was offset at the group level by the London assets - notably St Katharine Docks on the City’s eastern fringe - so that the total portfolio was marked down 1 per cent.
Broker Oriel Securities expects adjusted book value per share of 147p in Mar 2014.
MAX PROPERTY (MAX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 132p | MARKET VALUE: | £290m | |
| TOUCH: | 130-133p | 12-MONTH HIGH: | 136p | LOW: 100p |
| DIVIDEND YIELD: | nil | TRADING PROP: | nil | |
| DISCOUNT TO NAV: | 1% | |||
| INVESTMENT PROP: | £511m | NET DEBT: | 40% | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010* | 117 | 50.7 | 22.0 | nil |
| 2011 | 128 | 26.1 | 11.0 | nil |
| 2012 | 130 | 10.9 | 3.10 | nil |
| 2013 | 134 | 9.44 | 3.80 | nil |
| % change | +3 | -13 | +23 | - |
Ex-div: na Payment: na *10-month period from listing | ||||
