Development Securities has delivered a confident set of interim results, forecasting improved investment and trading gains for the full year.
“Some of the lights are coming back on within the UK economy,” said DevSec.
The developer, led by chief executive Michael Marx, posted a 2% increase in net asset value to 5.9p a share, reflecting £6m increase in net assets to £312.6m over the six-month period to the end of August.
Pretax profit also increased from a loss of £0.7m at this time last year to £8.1m, after the company made development and trading gains of £13.3m during the period.
The firm posted a positive outlook for secondary property valuations, stating that competitive bidding for good-quality secondary assets was returning and the “outlook is for the weight of money to increase in this market, leading to yield tightening across most submarkets”.
It added that it was “hopeful that not only will values remain stable, but that we will be able to recapture value in the second half of the year as the economy strengthens further and secondary yield compression returns”.
During the period the company secured seven planning consents, predominantly for foodstore-anchored mixed-use developments, and acquired “four new opportunities – recycling an element of realised gains into real estate assets where we can create value through regeneration”.
Marx said: “I am pleased to report a profitable performance during a busy period in which we made good progress across our diverse property portfolio. In the period we realised £13.3m of development and trading gains building on those delivered in the past couple of years, with good visibility on additional gains in the near- to medium-term.
“Valuations in our investment portfolio, which comprises good-quality, higher-yielding secondary assets, were stable in the period and are set to recapture value as the economy strengthens and investor appetite in this subsector continues to grow.
“This enhanced financial performance has further strengthened our balance sheet and positions us well to deliver significant value to shareholders over the medium-term. We are confident that our strategy of creating value by regenerating redundant or obsolete real estate is the correct one at this point in the economic cycle.”
bridget.oconnell@estatesgazette.com
