"The market is moving very quickly indeed outside London," notes Mike Brown, chief executive of Prestbury Investments. This is both a blessing and a curse for Max Property (MAX), the investment vehicle Prestbury manages. Mr Brown refuses to buy stock on a market that "is going bonkers" and sourcing off-market deals is increasingly hard: "we’ve had two close misses," he reports.
Yet the return of animal spirits to regional real estate will buoy the company’s portfolios of industrial estates and provincial offices which, together, account for half its gross assets. The much larger industrial portfolio was marked up 2.7 per cent over the six months to end-September - the first gain for two years. The vacancy rate fell to a new low of 11 per cent, but - more importantly - the rental yield fell as US private equity investors piled into the market. This trend has further to run; at 10 per cent, the valuation yield remains eye-catchingly high.
The other half of Max’s portfolio is in grubbier but still booming bits of central London - Holborn and St Katharine Docks. Rents in the former rocketed 15 per cent during the half as tenants are increasingly "priced out of the West End", says Mr Brown.
The company's adjusted book value, which is due to be realised before Max is wound up in September 2016, jumped 7.5 per cent to 147p. Broker Peel Hunt expects 158p for the year-end.
MAX PROPERTY (MAX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 149p | MARKET VALUE: | £328m | |
| TOUCH: | 147-150p | 12-MONTH HIGH: | 149p | LOW: 105p |
| DIVIDEND YIELD: | nil | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 3% | |||
| INVESTMENT PROP: | £534m | NET DEBT: | 36% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 131 | 1.42 | 0.8 | nil |
| 2013 | 145 | 26.8 | 10.5 | nil |
| % change | +11 | +1,787 | +1,212 | - |
Ex-div: - Payment: - | ||||
