London & Stamford builds £1bn war chest

London & Stamford, the property investment group, has lined up a £1bn war chest targeting new acquisitions in key markets such as London residential, south east distribution real estate and prime retail assets.

The company, which moved from Aim to the main market last October, posted 1.4 per cent increase in its net asset value to 122.4p a share for the year to March 31, which was damped by a 9.2 per cent increase in the number of shares in issue.

London & Stamford identified the potential for outperformance in the central London residential market, in particular in the private rented sector, as well as the distribution sector and prime retail market.

Patrick Vaughan, chief executive, said that the company was creating a large portfolio of London private rental accommodation through a series of deals with developers that needed finance.

He said that this could be floated into a separate listed vehicle, depending on the results of a review within government to relax rules on residential property companies.

Net income rose 160 per cent to £41.8m owing to three portfolio acquisitions, which took net assets to £668.7m. Pre-tax profit fell from £104.8m to £56.8m. Earnings per share dropped from 24.8p to 8.3p. Total dividend for the year was 6.3p a share, from 4.4 pence last year.

Raymond Mould, chairman, said that the company was still cautious over the fragile nature of the occupational market and would be careful in seeking well-priced and reliable income streams from well-located assets. More deals were coming to the market as banks worked through bad loans backed by real estate, he said, but much was not at an acceptable price.

The company, which was set up as an opportunistic property investment group during the real estate crash in 2009, made £440m of acquisitions during the year, most recently that of an office building at One Carter Lane in the City of London. It also acquired a portfolio of 58 apartments in Battersea in London for £27.9m, and three portfolios of logistical warehouses for £413.5m. It sold the Racecourse Retail Park at Aintree for £101.5m.

There was a less bullish report from Helical Bar, the property company run by Mike Slade, which moved to a full-year pre-tax loss of £6.3m, from a profit last year of £7.9m, as the company was forced into writedowns through the sale of unwanted non-income producing properties.

The company said that it was “rotating out of the old and into the new” to draw a line under a difficult period, but it had a solid platform for future growth.

Helical Bar said it was pursuing new investment and development opportunities. Mr Slade said: “It has been a long and hard four years since the warning bells sounded in mid-2007. It has required patience and discipline, however, the slate is now clean and the platform established to enable us to return to our outperforming ways.”