Heron International has come a long way in a relatively short time, but, despite some famous excursions into share dealing, its roots are still firmly anchored in property.
The latest annual report discloses an investment portfolio of completed properties of some £360m, producing a net annual rental income of over £20m.
Given that Heron’s total tangible fixed assets are only just over £400m at £409.4m and that pre-tax profits amounted to £50.1m, up 25% on the £40.3m of the year to March 31, 1986, the importance of property cannot be overstated, despite Heron’s other ventures.
This week, Gerald Ronson, Heron’s chairman and chief executive, underlined the commitment to the sector with a deal with Control Securities, the property group now controlled by Nazmu Virani (right) and his family.
In a joint venture arrangement, under which they will be equal partners, Heron and Control will seek new development schemes. Control will bring the schemes to Heron, which will provide finance. An initial £25m has been earmarked.
The plan is being cemented by Heron taking a 4.97% stake in Control, partly in payment for a portfolio of 23 properties which Heron is selling. The balance of the consideration will be £22.3m cash.
Heron’s joint venture with Control, which also recently acquired a portfolio of properties from Mountleigh Group, leaving Mountleigh with a near 9.7% stake, prompted speculation that Heron was making plans to allow parts of the empire to go public.
Earlier in the week, Heron announced the purchase of a near 5% stake in motor dealer T Cowie, and joint deals are expected to follow.
But what has to be brought into perspective is that these deals are tiny in relation to Heron’s own activities.
Last October, for instance, Heron acquired the property division of the Rumasa Group from the Spanish Government. That brought in over 200 properties, including the famous twin towers of Torres de Colon in the centre of Madrid, and undeveloped land including 10,000 housing plots.
Heron has operations throughout Europe, and negotiations are under way to purchase further substantial properties in Paris, Madrid, Barcelona and Frankfurt.
Back home, Heron’s commercial development programme, particularly concentrated on large-scale shopping schemes, exceeds £250m.
To finance these plans, Heron has maintained an active borrowing programme and at the balance sheet date was sitting on £132.5m of cash, compared with £47.7m a year earlier. Listed investments stood at £115.5m against £141.4m, providing Heron with a pool of instant liquidity of nearly a quarter of a billion pounds.
Long-term debt at the balance sheet date stood at £531m (£423.7m) — the greatest part was in unsecured loan stocks £381.4m (£239.1m). Short-term debt was £108m (£28m).
