London & Stamford makes £40m Aintree gain

London & Stamford made a £40m ($63m) gain on the sale of Aintree’s retail park near the Liverpool racecourse after just a year’s ownership, the property investment company said as it reported interim results.

The company, which is still co-owner of the UK’s third biggest shopping mall Meadowhall in Sheffield, said net asset value per share had grown just a penny from 120p at the end of the last financial year to 121p, mostly due to costs associated with its transformation into a real estate investment trust and a 10 per cent increase in its shareholder base.

The company said it would lift its interim dividend from 2.2p to 3p per share, which analysts said was ahead of expectations and showed management confidence in the property investing environment.

However, Raymond Mould, executive chairman, said London & Stamford remained cautious because of “the widespread economic uncertainty we see, exacerbated by government spending cuts, and continued uncertainties in world debt markets”.

“We continue to assess a wide range of opportunities to deploy our around £1bn worth of firepower, but we remain cautious in our approach,” he said. “Our primary aim is to secure high returns on our equity, whilst also acquiring prime assets let to good quality covenants on long term leases.”

Panmure Gordon, the analysts, raised their forecasts on the back of the results. “The company believes it has a potential acquisition firepower of £1bn based on 60-65 per cent LTV [loan-to-value ratio], although we prefer to take a more cautious view of £700m based on a 50 per cent LTV,” it said.

London & Stamford was set up as an opportunity fund by property veterans Mr Mould and Patrick Vaughan in late 2007, and was designed in part to exploit distressed sales by lenders. It converted to Reit status, which provides tax benefits to investors, with the goal of moving to the main stock market from Aim. It expects to become part of the FTSE 250 at the next review.

The company has also bought in £100m further funding from its joint venture partner, an anonymous middle-eastern investor known as Green Park, to help bolster its firepower for large deals where the equity is more than £30m.

Green Park has already taken a two-thirds share of its stake in Meadowhall and 50 per cent of two portfolios of distribution warehouses acquired since the end of the half year.

Shares in the company, which also booked a £20.9m increase in the market value of its assets, were 0.25p lower at 118.75p.