Duo to seek out distressed property investors

Two of the UK’s most feted property entrepreneurs are to return to the listed commercial property sector to take advantage of investors hit by the market slump.

Veteran investors Raymond Mould and Patrick Vaughan aim to raise as much as £200m in a public offering of their property investment company, London & Stamford, on Aim next month.

The company, which aims to have a £250m market value after floatation, will look for forced sales by distressed property investors who have called the market incorrectly over the past two years.

Mr Mould predicted a sustained slump in property values would mean potential bargain buying from sellers who can no longer cover the cost of finances.

“The UK property market is on the threshold of a correction in values,’’ said Mr Mould. “Property is mis-priced. It has gone too high. The cost of capital is now far above the yields being generated, which means people will start to struggle and may need to sell quickly.”

Mr Mould and Mr Vaughan have worked together since the late 1960s, notably setting up and selling Arlington Securities and Pillar Property.

Mr Mould said the correction had further to go.

The pair will help manage the investment vehicle, which will buy property in the UK and overseas. London & Stamford will be backed by debt from HBOS, which will give the company an acquisition war chest of up to £500m.

Mr Mould and Mr Vaughan will trade their stakes in London & Stamford for shares in the listed vehicle.

London & Stamford is part owned by the General Electric Pension Trust, which will take a further £18m stake in the new company. KBC Peel Hunt will advise and manage the floatation.

Mould and Vaughan set up their first company, Arlington, in the 1980s.