But for Black Monday, the stock market would have reacted positively to Trafalgar House’s announcement of deals in the City and in the US.
Trafalgar is continuing to expand in two of the areas where it already excels, property development and housebuilding. The purchase of the headquarters of Inchcape at 40 St Mary Axe gives the group another prime City of London project which should generate significant profits.
The acquisition of the US housebuilder, Capital Homes, is another step in the plan to become a major force in US housebuilding, complementing the position in the UK where Trafalgar is already number four in the league with completions of around 5,500 units planned this year.
The City deal was brought to Trafalgar by ARC Properties, part of the Gold Fields group, and the two companies are doing the development on a 50/50 joint venture basis.
Each is putting in its half share of the £22m required to buy the building, which is to be refurbished by Trafalgar’s in-house contractors, to give 45,000 sq ft of space.
The expectation is that the building will go to an owner-occupier and could command a valuation of over £50m. Outside finance will, I imagine, be brought in.
The deal is the first since Trafalgar House opened a small City office under Tim Garnham, from Vigers, earlier this year. The group has allowed its City activity to run down, with only one 50,000-sq ft project, on London Wall, under way.
In the US, Trafalgar is buying Capital Homes for $20m from the National Corporation for Housing Partnerships, following the setting up of a pilot operation last year where it is already developing at five sites, two of them in the construction phase.
Property and housebuilding contributed £76m before interest to Trafalgar’s profits last year, and the new US buy could be earning $10m to $15m pa within the next two to three years.
With other City of London developments being sought from the new City office, Trafalgar has a new enthusiasm for property which will do its market standing no harm at all.
