Development Securities this week continues to look for opportunities in the secondary and regional markets as it returns to profit with a solid set of results.
The investor and developer said that the banking sector’s continued reluctance to lend to the real estate sector allowed the company to target opportunities to create new institutional investment product.
Chief executive Michael Marx said: “Our current role is focused on the transformation of assets, which presently languish for one reason or another within the secondary sector of the market, into higher-quality real estate that will appeal to the ultimate cash investor.”
As well as continuing to pursue mixed-use developments, it is also looking to a number of other sectors. These include the residential market, “which offers interesting demand-supply dynamics”, strategic land and the care home sector, where it would work with specialists.
DevSec said it was also actively looking at central London development sites “where creativity and added value justify risk and price”, such as the redevelopment of the Shell Centre, which it bid for in partnership with US private equity giant Carlyle.
The company reported a 4.6% increase in the value of its 37-strong direct investment portfolio, which was valued at £199.2m at 31 December. Its net assets were £333m at the end of the year.
Despite this rise, DevSec posted an 8% drop in its net asset value to 272p per share as a result of dilution from recent fundraising and dividend payments, which will total 4.8p per share for the year.
It spent £109m of the £200m of equity it raised in 2009 and 2010 on investment and development purchases totalling £233m over the period.
Many of these deals over the past 18 months “come forward to the market by virtue of some degree of financial stress”, which it expects to continue.
Its most significant acquisition during the period, the Manchester Arena Complex, which it bought for £62.2m in June, increased in value by almost 20% by the end of the year.
It made a pretax profit of £2.6m compared with a loss before tax of £11.4m in the previous year.
? David Haye at Manchester Arena, which DevSec bought in June
