Shares in St Modwen Properties (SMP) have clawed back all the losses sustained in the wake of the referendum, but investors' jitters mean they still trade at just two-thirds the book value. This looks misplaced for several reasons, not least the fact that nearly half of the development arm is already pre-let or pre-sold. And, of the 33 schemes at the start of the last financial year, a total of 19 were either sold in the 12 months to November, or matured, and are now generating income.
- Shares trading at a large discount to NAV
- Windfall possible from asset sales
- Strong rental income
- Modest loan-to-value ratio
- Weak dividend
- Poor sentiment
Despite all of this, St Modwen lives in the shadow of concerns about the central London Nine Elms development, where the existing New Covent Garden will be accommodated into a smaller space, freeing up 10 acres of prime development land. The worry, exacerbated by the referendum, is that St Modwen is sitting on a white elephant. We think this looks misplaced, and anyway Nine Elms is just 10 per cent of net asset value (NAV).