Company has deployed well over half of £188m equity raised since 2009
Development Securities has invested £110m of the £188m of equity it raised during 2009 and 2010. Including debt, the quoted property company has made
£233m of acquisitions since the first equity raising in July 2009. The company buys secondary assets that it believes can be converted into institutional-standard stock.
Finance director Graham Prothero said deals had come “thick and fast” and the pipeline of future deals looks strong. “The deals are out there, because of the starvation of capital in the secondary and regional markets. “There’s a graph we use that shows that if you set prime and secondary yields to 100 in July 2009, when we raised the first £94m, prime has now moved to 130 and secondary has shuffled sideways and is still at 100.”
“If you buy secondary property, you can’t, for example, move an asset in a Coventry suburb to London, but if you put in a Waitrose, you can raise the value to 120 on our graph.” The value of DevSecs’ net assets increased from £244m to £333m last year, largely as a result of the second equity raising in August 2010. Prothero said the company is planning some sales to recycle the equity capital “earlier than we thought originally”.
DevSecs’ acquisitions include three distressed property sales by banks, including a Lloyds portfolio formerly owned by Rock Group The total return from DevSecs’ £199m investment portfolio in the year to December was 15.2%. There is no central London property in the portfolio and the company comfortably beat the comparable IPD return for property outside the capital, which was 10.1%.
Group gearing was 27.7% and the weighted average maturity of borrowings was 8.3 years, partly due to a 15-year, £58m loan, which the company completed a year ago with Aviva to refinance a portfolio mainly financed with equity. The company has lined up finance with a UK insurer for the 105,000 sq ft first phase of an office development at Hammersmith Grove. The scheme won planning permission this month.