Development Securities to target large projects

Development Securities will target opportunities for large-scale development projects in the UK as well as buying lower-priced investment property as part of its return to the commercial property market.

Michael Marx, chief executive, said the company was “in the right place at the right time with the right money” to capitalise on a “remarkable” market for property investment.

The company, which raised £100m ($164m) through a placing and open offer in July, said it planned to co-invest in large development projects and secure more modest schemes on its own, although Mr Marx cautioned that it was too early to begin building again. “It is not the time to start new development but it is the time to acquire the sites for development,” he said.

The company also said it was looking to acquire property at yields above long-term average that could be traded in the nearer term, as well as distressed loans secured against good property.

About £27m has been spent on four acquisitions since the fundraising, including the purchase of a bank loan secured on a shopping centre in south-west England for £10m.

Mr Marx said it had served a default notice on the loan, effectively taking control of the property, and had also acquired a neighbouring site. Development Securities is now in talks to let the extended centre to a major food store. “This is good old-fashioned real estate,” said Mr Marx.

The company reported that net assets declined 11.2 per cent to £143m in the first six months of the year – a drop in net asset value per share from 397p to 352p. Its investment portfolio fell in value by 9 per cent.

The deterioration of property market values led to a pre-tax loss of £19.1m in the six months to June 30, the same as in the first half of last year. Revenue fell from £127.3m to £18.9m.

Net debt rose from £87.2m to £116.2m. The interim dividend is maintained at 2.4p.

The shares closed down 2¾p at 346¼p.