Development Securities has slipped into the red with a £1.3m pre-tax loss, but remains confident its intense acquisition spree will pay dividends in 2012.
The developer posted a £1.3m pre-tax loss in the six months to 30 June, compared with a pre-tax profit of £800,000 for the same period last year, and a £2.6m profit in the 12 months to 31 December 2010.
Net asset value per share dipped to 269p from 272p at the end of last year.
DevSec said it had now spent more than £150m of the £188m raised in two share issues since July 2009. The average hold time of these schemes is three to three and a half years, meaning a material return is not expected until mid 2012.
Chairman David Jenkins said the company had benefited from a market in which many properties and projects were “constrained by lack of capital and expertise”. The firm’s acquisition strategy centres on buying such assets and enhancing their value through planning and redevelopment.
Purchases in the first half include office and retail block Newcombe House, in Notting Hill, W8, which DevSec bought for £47.5m with Brockton Capital and Colston Tower, a multi-let office building in Bristol, bought for for £7.6m.
Elsewhere, the company in March won permission for a 275,000 sq ft mixed-use redevelopment of its Hammersmith Grove site. Chief executive Michael Marx said: “We are in advanced negotiations with institutional forward funding for the scheme.”
DevSec said it remains cautious about the second half of 2011, and is wary of possible tenant defaults, and of the potential for a significant liquidity squeeze, should European sovereign concerns translate into significant losses for the banks.
“The lack of any meaningful economic growth will continue to restrict the ability of landlords to achieve rental growth in the wider market,” said Jenkins.
