Jones Lang LaSalle Corporate Finance has become the first agent to set up and advise on a listed company aimed at property development.
DevCap, which is aiming to raise £50m through flotation on AIM, will target £10m-£30m joint venture developments. JLL will invest up to £1.75m and will act as asset manager, as well as giving financial advice and business management to the new company.
JLL Corporate Finance director Tony Edgley said: “We see this vehicle as satisfying two groups of clients — developers who are looking for alternative sources of capital and investors who want access to development schemes.”
The company will be led by an independent board headed by Paul Ludlow, who was until recently managing director of Severn Trent Property, sold this week by JLL to ProLogis (p44). With gearing of up to 80% loan-to-value on individual schemes, DevCap could have an end development value of £300m.
A market commentator said: “As the agents move towards property investment banking they are likely to go into more and varying products; the co-investment side is normal. This is fairly innovative stuff, but the more products in the market, the better for everyone.”
DevCap is targeting a 5% dividend within two years. Through focusing on development, shareholders should be able to shelter their investment from inheritance tax as well as receiving business taper relief on capital gains tax.
JLL Corporate Finance will earn an annual management fee of 1% of the net development value of properties held by the company. Bridgewell is adviser and broker to DevCap.
Edgely said the firm had not ruled out expanding into Europe.
So far the company has entered into two jvs in Berkshire — an office development site in Maidenhead, with Terrace Hill, and an industrial development scheme in Aldermaston, with Easter Group.
