MOUNTVIEW ESTATES: Lowly 50% FY Gross Margin Regardless of File £395k Common Gross sales Worth Indicators Property Purchases Realising Restricted Positive factors And Leaves £100 Shares Buying and selling At NAV Acquire US

28 October 2023
By Maynard Paton

FY 2023 outcomes abstract for Mountview Estates (MTVW):

• A lacklustre FY efficiency, with revenue down 2% to the bottom stage for ten years regardless of common property gross sales (excluding floor rents) rising 14% to a file £395k.

• Property gross sales attaining a 50% gross margin, the worst for 14 years, counsel properties bought following a 2014 valuation have realised very restricted premiums on disposal.   

• Debt stays beneath management at 12% of the property property, though £56m was spent on new properties — the biggest quantity since FY 2008 — regardless of administration discuss of ongoing “tough financial circumstances“.

• Protest votes towards the board’s composition and remuneration proceed to extend, with property investor David Pears among the many sad shareholders asking questions on the newest AGM.

• The £100 shares commerce at web asset worth (NAV), which in concept costs in no future property good points, and provides a 5% earnings, the very best for many years apart from the banking crash. I proceed to carry.

Contents

Information hyperlinks, share information and disclosure

Share value: £100
Share depend: 3,899,014
Market capitalisation: £390m

Disclosure: Maynard owns shares in Mountview Estates. This weblog put up comprises SharePad affiliate hyperlinks.

Why I personal MTVW

• Board led by veteran household administration that continues to boast an mixture 50%/£195m shareholding.  

• Properties are carried at price, and when ultimately offered at their ‘reversionary’ values could generate complete proceeds considerably in extra of the latest market cap.

Additional studying: My MTVW Purchase report | All my MTVW posts | MTVW website

Outcomes abstract

Income, revenue, dividend and web asset worth

• After the previous H1 expressed warning about “financial storms“…

“We’re all conscious that tough occasions lie forward however the monetary energy of this Firm ought to allow us to climate the financial storms that lie forward higher than most.” 
…
“Everyone knows that occasions are going to be powerful, however I consider that this Firm is best positioned than most to outlive the difficulties and certainly prosper. “

• …this FY was maybe by no means going to point out an exquisite H2.

• Though H2 income gained 3% to £36.4m…

• …H2 working revenue dived 22% to £15.5m, the bottom H2 revenue since H2 2012 (£12.0m):

• The H2 efficiency meant FY 2023 income superior 11% to £73.6m, the very best since FY 2017 (£78.2m)…

•  …however FY 2023 working revenue slipped 2% to £34.0m, the bottom since FY 2013 (£30.0m).

• Income was break up 74%/26% between property gross sales and rental earnings, which matched the previous ten-year common (73%/27%): 

• Word that MTVW sometimes sells its regulated-tenancy properties when the tenancy ends — which just about at all times happens when the tenant dies. 

• MTVW claimed “tough financial circumstances” would proceed for a while…

“Tough financial circumstances could also be with us for some years however I’m assured that Mountview will stay worthwhile and that the Firm will stay a sound funding for all its stakeholders.”

• …and even steered shareholders must be glad about the enterprise staying afloat:

“We are actually dwelling within the circumstances of double digit inflation and rising rates of interest which give us very totally different issues to these skilled earlier than and certainly through the Covid pandemic. At a time when corporations are failing to pay dividends and even ceasing to commerce, mere survival have to be thought-about to be a hit.“

• MTVW hoped its “decrease priced” property portfolio is probably not too broken by any downward housing market:

“We’re lucky that the properties that Mountview brings to public sale are sometimes in excessive demand as they provide a decrease priced entry to the housing market or, if offered to builders, present alternative for ‘developer revenue’.

We’re hopeful due to this fact that Mountview will proceed to be properly positioned to climate any continued down flip within the basic housing market, ought to it happen, by way of each persevering with gross sales of enticing properties and in addition with the chance to buy probably discounted substitute properties each by way of public sale and personal tender.”

• Most of MTVW’s properties are situated inside London and south-east England, and 696 (87%) of the 800 properties MTVW offered between FYs 2019 and 2023 achieved lower than £500k:

• The cost of the 250p per share particular dividend introduced throughout the previous H1 triggered web asset worth (NAV) per share to say no for the second consecutive FY:

• NAV ended this FY at £391m, or £100.21 per share, versus £393m, or £100.92 per share, one yr earlier and £395m, or £101.27 per share, two years earlier.

• The 250p per share H1 particular dividend price virtually £10m, and had been it not paid would have lifted NAV to £400m or £102.71 per share.

• Had been the 275p per share H1 particular dividend of FY 2022 additionally not paid, NAV could be £411m or £105.46 per share.

• MTVW’s NAV per share progress has slowed over time. 

• NAV per share has compounded at:
  • 2% through the 5 years to FY 2023;
  • 5% through the ten years to FY 2023;
  • 5% through the 15 years to FY 2023, and;
  • 7% through the 20 years to FY 2023.

• The ultimate dividend was stored at 250p per share to depart the full-year unusual payout 25p greater at 500p per share: 

• Companies House reveals the unusual dividend has by no means been minimize since no less than 1985 — after which the payout has risen 111-fold:

Buying and selling properties: disposals and acquisitions

• The 184 properties offered throughout this FY in comparison with 135 through the comparable FY, with 74 offered throughout H1 and 110 offered throughout H2:

• The 184 offered was the biggest variety of disposals since FY 2016 (209):

• The common sale value of £295k for this FY was skewed by the disposal of fifty floor rents:

“In the course of the monetary yr we achieved gross sales of £54.2 million (2022: £46.8 million), demonstrating the liquidity of the Portfolio. The common gross sales value achieved, excluding gross sales of floor hire, was £395k (2022: £347k).” 

• Ground rents are typically low-value investments. The 2023 annual report signifies MTVW’s floor rents are carried at a mean price of £6k every:

• The 50 floor rents had been offered for about £1.3m, or £26k every.

• Administration’s AGM remarks famous the Leasehold Reform Act had prompted the ground-rent disposals and admitted different floor rents could be analysed for potential sale, too. 

• MTVW claimed the common sale value excluding floor rents was £395k, up a helpful 14% on the comparable FY’s £347k.

• The £395k determine could have itself been skewed by MTVW promoting 5 properties for a mean £1.4m:

• MTVW has by no means earlier than offered 5 properties for greater than £1m every throughout an FY since first disclosing such statistics throughout FY 2008.

• Some £53m (earlier than buying bills) was used to accumulate 185 properties throughout this FY:

• The 185 properties acquired was the very best since FY 2013 (236):

• Together with buying bills, the £56m spent on new properties was the biggest sum since FY 2008 (£100m) and exceeded the mixture expenditure witnessed throughout FYs 2020, 2021 and 2022 (£55m):

• MTVW steered the acquisition spree was prompted by market and/or regulatory issues inflicting different landlords to promote:

“There are hypotheses circulating that the rising alternatives for buying have arisen attributable to both basic issues concerning the property market or extra straight, issues amongst consumers about buying properties with sitting tenants within the face of proposed reforms to the rental market.

In both case each play into Mountview’s core values round cautious buying of primarily regulated tenancies and persistence in ready for vacant possession, with the latter extremely aligned with the goals behind the proposed leasehold reform. “

• How the biggest buy spend since FY 2008 marries up with the aforementioned feedback of “tough financial circumstances could also be with us for some years” was not defined.

• Nevertheless, administration’s AGM remarks implied some landlords had turn out to be pressured sellers:

“Not everybody retains their gearing on the modest stage we do. There are some who’re being pressured to promote to maintain inside their borrowing limits, which presents alternatives to us and fewer competitors for properties. The alternatives have been there and the costs have been slightly extra modest than they had been“.

Buying and selling properties: gross margin and rental earnings

• MTVW’s margin and revenue can fluctuate as a result of unpredictable mixture of properties changing into out there on the market throughout any explicit interval. 

• The proportion achieve on every property offered — mirrored by MTVW’s gross margin — is often correlated to the length of MTVW’s possession, which might vary from a number of years to a couple many years.

“Whereas gross sales had been properly forward of 2022, as soon as once more the fee elements associated to timing and site of buy led to flat gross revenue…“

• A 50% gross margin was achieved by way of property gross sales throughout this FY:

• The 50% property-sales gross margin was the bottom since FY 2009 (43%).

• A 47% property-sales gross margin was achieved throughout H2, the bottom since H2 2009 (46%):

• A 47% property-sales gross margin is due to this fact very uncommon, particularly as common promoting costs (excluding floor rents) throughout this FY had been a file £395k.

• A property-sales gross margin of 47% is equal to purchasing a property for £100k and promoting it for £189k.

• Administration’s AGM remarks steered the low gross margin could have been attributable to a larger proportion of extra just lately bought properties being offered throughout the previous few years.

• The combination of properties offered tends to even out over time. MTVW’s common property-sales gross margin over five-year durations has been fairly constant:
  • FYs 2019 to 2023: 58%
  • FYs 2014 to 2018: 62%
  • FYs 2009 to 2013: 58%
  • FYs 2004 to 2008: 65%
  • FYs 1999 to 2003: 59%

• Emphasising the gross-margin fluctuations as a result of unpredictable mixture of properties changing into out there on the market, the aforementioned 43% property-sales gross margin for FY 2009 had rebounded to a brilliant 67% property-sales gross margin by FY 2012.

• MTVW’s rental-income gross margin remained at a traditional 69% after sure upkeep work was deferred through the pandemic:

• FY rental earnings of £19m gave a 4.5% rental yield from the carrying worth of all properties:

• MTVW’s property property had a book-value equal to a 6% rental yield when rates of interest beforehand approximated 5% previous to FY 2009.

Buying and selling properties: properties valued by Allsop

• An encouraging improvement throughout this FY involved the proceeds from offered properties in comparison with a previous valuation.    

• To recap, MTVW commissioned property agent Allsop throughout September 2014 to evaluate the group’s property.

• Allsop returned a £666m valuation — some 2.1x the £318m ebook worth of the properties owned on the time.

• The Allsop evaluation was primarily based on MTVW’s properties remaining of their regulated-tenancy state and due to this fact excluded any ‘reversionary’ achieve (i.e. the worth uplift that happens when a regulated tenancy finishes, the hire reverts to a correct market stage and the property can then be offered at a good market worth). 

• The Allsop evaluation was by no means utilized to the audited accounts. MTVW’s properties as an alternative stay on the stability sheet at their price value.

• Following the Allsop evaluation, MTVW reveals the proceeds from offered properties versus their Allsop valuation:

• This FY witnessed MTVW promote properties with a mixed £23.0m Allsop valuation for £36.2m — a premium of 57%.

• This FY’s 57% premium was break up 54% throughout H1 and 62% throughout H2:

• Previous to the pandemic, premiums of between 43% and 53% on the Allsop valuation had been realised on gross sales proceeds.

• H2’s 62% premium is the very best apart from the 65-66% achieved through the comparable FY.

• The realised premium versus the Allsop valuation has implications for estimating MTVW’s potential share value (see Valuation).

• In the course of the 8.5 years following the Allsop evaluation, MTVW has raised £388m from promoting properties that the agent had valued at £259m.

• Promoting properties that Allsop had valued at £259m implies the ebook worth (i.e. the unique price) of the properties offered was £124m (£259m divided by the aforementioned 2.1x a number of). 

• Promoting Allsop-valued properties with a £124m ebook worth signifies Allsop-valued properties with a £194m ebook worth stay inside MTVW’s possession immediately (i.e. the £318m ebook worth on the September 2014 evaluation much less the £124m since offered).

• MTVW throughout this FY offered Allsop-valued properties with an estimated ebook worth of roughly £11m (£23m/2.1), which signifies the remaining Allsop-valued properties of £194m may take an extra 18 years to promote.

• This FY confirmed complete buying and selling properties with a £423m ebook worth, implying properties bought after the Allsop evaluate have a £229m ebook worth (i.e. £423m much less the remaining Allsop-valued properties of £194m).

• As extra Allsop-valued properties are offered and different properties are bought, the much less related the 2014 Allsop valuation turns into to the share value.  

• MTVW’s outcomes commentary has by no means referred to the Allsop valuation because the evaluation was undertaken.

• Administration’s AGM remarks reiterated one other Allsop-type evaluation was not being thought-about. The identical previous causes had been as soon as once more reeled off:
  • The evaluation shouldn’t be utilized by administration;
  • The evaluation is dear, and;
  • There isn’t a accounting requirement. 

• The 2023 annual report repeated the next textual content from earlier years:

“The [Allsop] valuation is not a useful gizmo for working the enterprise as a result of we’re at all times going to await vacant possession, and no perceived uplift in worth can justify promoting a tenanted property. The character of our enterprise and the principles and conventions beneath which we function place no obligation upon us to worth our buying and selling inventory at any given time and due to this fact the valuation has not been up to date since.” 

• I preserve MTVW must implement common valuations to supply larger readability as to the inherent worth of the group’s property property.

• Thoughts you, MTVW’s long-term dividend and NAV data don’t counsel exterior shareholders have been too onerous completed by by way of a scarcity of formal valuations. 

• September 2024 will mark ten years because the Allsop evaluation was undertaken.

Buying and selling properties: properties not valued by Allsop 

• The Allsop evaluation and related disclosures enable shareholders to judge the properties not valued by Allsop.

• Throughout this FY, properties purchased after the Allsop valuation raised proceeds of £18m:

• However what was the unique price of these properties that raised the £18m?

• The Allsop-valued properties offered throughout this FY had an Allsop valuation of £23m, which suggests their ebook worth (i.e. buy value) was £23m/2.1x = £11.0m.

• The overall ebook worth of properties offered throughout this FY was £27.0m, which suggests the ebook worth of the properties purchased after the Allsop valuation and offered throughout this FY was £27.0m much less £11.0m = £16.0m.

• Elevating £18.0m from promoting properties with an estimated £16.0m buy value doesn’t appear distinctive… 

• …particularly when administration’s AGM remarks (each through the 2021 and 2023 occasions) confused MTVW bought regulated tenancies at 75% of their vacant possession worth.

• In concept no less than, a regulated property bought sooner or later at 75% of vacant possession worth — which then turns into vacant the subsequent day — ought to get pleasure from an instant 33% worth uplift.

• In the course of the 8.5 years following the Allsop valuation, MTVW has raised a complete £51m from promoting properties not valued by Allsop with an estimated ebook worth (i.e. buy value) of £49m:

• My estimates don’t counsel MTVW has labored miracles shopping for (after which promoting) properties following the Allsop evaluation of September 2014.

• These estimates may simply clarify why NAV progress has slowed throughout latest years; properties purchased and the offered since September 2014 have seemingly reported restricted good points. 

• These estimates may additionally clarify why my analysis of MTVW’s property property has probably not improved throughout latest years. My earlier calculations had been:

• Shopping for after which promoting properties for restricted good points since 2014 can also clarify why the share value has made little headway throughout the identical time:

• In fact, not each property MTVW has bought following the Allsop evaluation has been offered. 

• These properties not valued by Allsop however nonetheless owned by MTVW could possibly be sitting on enormous paper good points, whereas these which have been offered had been held for brief durations that will at all times restrict their last revenue.

• Moreover, MTVW acquires properties apart from regulated tenancies, which can require greater than the 8.5 years because the Allsop evaluation to maximise their upside. 

• Nonetheless, shopping for properties for an estimated £49m and promoting for £51m can’t be deemed a rousing success and possibly explains the pointed questions from David Pears at this yr’s AGM (see Protest votes, David Pears and executive pay). 

• The dearth of any additional Allsop-type evaluation leaves me to imagine the properties not valued by Allsop however nonetheless carried on the stability sheet is probably not value way more than their aforementioned £229m mixture buy value.

• Administration’s AGM remarks claimed there was “little distinction” between the returns on properties bought through the Nineteen Nineties or earlier, and the return on properties purchased because the 2014 Allsop valuation.

Financials

• MTVW’s accounts stay very easy, with properties and debt the 2 prime entries. 

• The aforementioned £56m spent on new properties left free money stream at minus £8m, with further debt of £38m and dividends of £29m leaving FY web debt at £56m.

• Internet debt at £56m is the very best since FY 2015 (£60m) however is equal to solely 12% of the group’s £448m complete property property — traditionally low versus the 25%-plus ranges witnessed throughout FYs 2008, 2009, 2010, 2012 and 2013:  

• Administration’s AGM remarks famous the board would “pay a lot larger consideration to managing debt and money stream” if gearing reached 25%.

• MTVW’s present banking services enable borrowings of as much as £90m, equal to twenty% of the full property property.

• Finance prices of £1.2m for this FY exceeded the ultra-low £298k for the comparable FY, and implied a manageable 3.2% rate of interest on this FY’s £38m common debt.

• Word that H2 finance prices had been £876k — greater than double H1’s £336k — attributable to larger debt and rising debt prices.

• Common debt throughout H2 was £43m, implying a 4.1% rate of interest:

• Curiosity price at 4.1% is the very best since H2 2013 (4.3%). H2 debt prices of £876k had been the very best six-month cost since H2 2014 (£1.2m).

• The 2023 annual report confirms MTVW’s borrowings are variable charge with a margin of roughly 2% above SONIA:

1. The Group has a short-term borrowing facility of £10 million (2022: £10 million) with Barclays Financial institution. That is due for evaluate in November 2023 and the speed of curiosity payable is:

• 1.6% over base charge on overdraft
• Headroom of this facility at 31 March 2023 amounted to £9.94 million (2022: £10 million).

2. The Group has a £60 million (2022: £60 million) long-term revolving mortgage facility with Barclays Financial institution with a termination date of March 2027. The speed of curiosity is 1.9% above SONIA. The mortgage is secured by a cross assure between Mountview Estates P.L.C. and its subsidiaries. The mortgage shouldn’t be repayable by instalments. Headroom beneath this facility at 31 March 2023 amounted to £20 million (2022: £58 million).

3. The Group has re-negotiated a £20 million long-term revolving mortgage facility with HSBC Financial institution. The termination date for this facility is March 2028. The speed of curiosity payable on the mortgage is 2.1% above SONIA. The mortgage features a Unfavorable Pledge. The mortgage shouldn’t be repayable by instalments. As at 31 March 2023 headroom beneath this facility amounted to £3.3 million (2022: £2.8 million).”

• Assuming gross debt stays at £57m and SONIA stays at 5.19%, finance prices would advance from £1.2m to £4.1m for FY 2024.

• Additional finance prices of £3m equate to roughly 77p per share, and the upper charges will dampen future NAV progress.

• This FY’s £6.3m tax cost would have been £8.2m beneath the brand new 25% UK tax charge. 

• Additional tax of £1.9m equates to roughly 49p per share, and the upper charge will even dampen future NAV progress.

• MTVW’s trading-property property has a £423m ebook worth, of which regulated tenancies signify £334m or 79%:

• The variety of regulated tenancies owned by MTVW topped 3,000 20 years in the past, topped 2,400 ten years in the past however immediately stands at lower than 1,900:

• MTVW’s standard funding properties stay within the books at £25m or £6.52 a share.

• An excellent £4.4m due from three property gross sales  — paid simply after the yr finish — meant commerce debtors had been uncharacteristically properly past the sometimes tiny 1% of income:

• MTVW’s accounts stay freed from defined-benefit pension obligations.

Protest votes, David Pears and govt pay

• MTVW’s shareholders fall into three camps:
  • The Sinclair household live performance celebration, which is led by chief govt Duncan Sinclair and controls 50.4% of the share count;
  • The Murphy household and linked events, who declare to personal 24% of the share depend and whose main shareholder is Margaret Murphy, the chief govt’s sister, and;
  • Everyone else, who personal roughly 25% of the share depend.

• MTVW’s final seven AGMs have witnessed c30% (or extra) protest votes towards:
  • Re-electing unbiased non-execs;
  • Approving the board’s pay, and;
  • Re-appointing the auditors. 

• The protest votes have been led by the Murphy household and linked events.

• From what I can inform, the Murphy household is broadly happy with how MTVW’s day-to-day operations are run, however:
  • Is aggrieved concerning the board’s pay;
  • Has misplaced the belief of the non-execs to behave on the views of all shareholders, and;
  • Is annoyed a few basic lack of affect at board stage.

• The Murphy household acknowledged through the 2021 AGM that it was now not in direct communication with the corporate and would have interaction with the administrators solely by way of a “public discussion board“.

• The 2023 AGM attracted one other sad shareholder: David Pears. 

• In the course of the AGM Mr Pears requested:

“Rates of interest have gone from zero to five%, however you might be nonetheless paying 75% of vacant possession. At zero you might be paying 75% and at 5% you might be paying 75%?!
…
“Are you able to disclose IRRs on the properties offered? Your outcomes could possibly be flattered as a result of properties that will have been introduced in 1990. I’m involved together with your strategy, spending £50m with rates of interest rising, and EPC prices. What kind of return are you actually going to get from immediately and from the previous few years as properly?”
…
“You’ve gotten talked about succession plans for [non-executive] Ms Archibald. What are the succession plans for the senior administration?“

• I sat straight in entrance of Mr Pears through the AGM and let’s simply say through the post-meeting chit-chat he didn’t seem impressed by the board’s responses to his questions.

• Talisman’s shareholding has elevated from lower than 3% to greater than 7% since 2016:

• I don’t know why Talisman has elevated its shareholding given Mr Pears appears sad with the board. 

• The Murphy household, (presumably) Talisman and different sad shareholders prevented the re-election of sure non-execs on the final AGM — and the six prior AGMs:

• Following every AGM, MTVW is entitled to convene a basic assembly (GM) and maintain an extra vote to re-elect the ousted non-execs.

• The ousted non-execs have (so far) all been re-appointed on the subsequent GMs as a result of the Sinclair live performance celebration can then vote on the non-exec re-elections (not like on the AGMs, the place the live performance celebration is prohibited from voting on explicit ‘unbiased’ resolutions):

• The GM to re-appoint the non-execs voted off the board on the 2023 AGM shall be held on 20 November.          

• The variety of sad shareholders has been rising. The common AGM votes towards the re-election of the contentious non-execs have climbed from 827k to 1,220k since 2017.

• The 2023 AGM additionally revealed a 9% protest vote towards MTVW’s two executives. 

• I speculate that 9% was led by Talisman. Close to-3% protest votes towards the executives had been lodged on the 2022 AGM, with immaterial protest votes lodged earlier than 2022.

• Inventory-market guidelines dictate any firm incurring a 20%-plus AGM or GM protest vote has to contact the sad buyers and publish an replace to shareholders inside six months. 

• Six months after the 2022 basic assembly, throughout Could 2023, MTVW introduced:

“Following the assembly, the Firm recognized, so far as attainable, these shareholders who didn’t help the resolutions and tried to have interaction with them to hunt their views. Some shareholders didn’t want to have interaction, different shareholders raised issues that are into consideration by the Board. 

The Board is grateful to these shareholders who took half within the engagement course of and worth the suggestions supplied. The Firm re-affirms its dedication to ongoing shareholder engagement and can proceed to supply to have discussions with shareholders and can have in mind their issues and issues sooner or later.”

• MTVW has by no means earlier than expressed its gratitude to shareholders offering suggestions.

• However whether or not any of the issues raised will convert into motion stays to be seen.  

• At least 13 AGM/GM protest votes since 2017 counsel the “engagement course of” has no affect on board selections.

• The ineffective protest votes haven’t but persuaded the Murphy household to promote; specifically, Companies House signifies Margaret Murphy has maintained a 500k-plus shareholding since no less than 1980.

• My suggestions to a non-exec after the AGM was MTVW would obtain far much less grief if the executives toned down their pay and redeploy the financial savings into an occasional property valuation.  

• Chief exec Duncan Sinclair has obtained a bonus yearly since no less than FY 2001…

• …which does increase the query as as to if board bonuses are successfully assured.

• The 2 executives shared £2m between them final yr…

• … whereas the broader workforce averaged a helpful £79k:

• The sensation amongst attendees through the post-AGM chit-chat was the board could be very properly paid for primarily:
  • Placing vacant properties into public sale;
  • Gathering hire, and;
  • Shopping for properties throughout latest years that will not have earned worthwhile good points on disposal.

• MTVW is the one firm I do know that features remuneration ratios inside its annual-report abstract desk:

• MTVW ought to add ratios that examine remuneration to NAV.  

• For this FY, govt pay of £2m decreased NAV by 0.5% and complete pay of £4m decreased NAV by 1%.  Such share reductions have occurred constantly all through the final 20 years. 

• Worker pay lowering NAV by 1% every year has turn out to be extra notable after NAV declined throughout this FY and the earlier FY.

• At the least MTVW doesn’t function a share-option scheme, and in reality has by no means issued any new shares since no less than 1979.

Valuation

• I now calculate MTVW’s shares could possibly be value £186 had been all the group’s regulated tenancies to finish instantly and the properties then offered at a good market worth.

• The next desk outlines the sums:

• I’ve taken the property’s September 2014 worth of £318m and subtracted the (estimated) £124m ebook worth of Allsop-assessed properties offered since that date. 

• I then multiplied the £194m the rest by the two.1x ‘Allsop-premium-to-book’ a number of after which added the 57% ‘sold-premium-to-Allsop’ achieve that was realised throughout this FY.

• I arrived at a £640m estimate for all of MTVW’s properties that had been owned at September 2014 however have but to be offered.

• Since September 2014, MTVW has acquired further properties with a £229m ebook worth. 

• Including the £640m and the £229m collectively provides £869m.

• This subsequent desk adjusts that £869m for 25% taxation, the £25m standard property portfolio, web debt and different liabilities to present a attainable ebook worth of £725m or £186 per share:

• My estimated NAV sums should not good, and the next questions stay unanswered:
  • How lengthy will MTVW take to promote all of its properties?
  • Will potential house-price inflation compensate for being unable to promote all of the properties instantly?
  • How related is the 2014 Allsop evaluation immediately?
  • Will properties purchased because the 2014 Allsop evaluation proceed to be seemingly offered at price value?
  • What affect may annual admin prices of £7m have on the calculations? (I’ve ignored such prices)

• MTVW’s shares have drifted decrease to commerce at NAV:

• The perfect time to purchase seems to be when the market cap trades at (or under) NAV, at which level no future good points from any property purchases are priced into the valuation.

• What future good points may lie forward?

• For perspective, the ten years to this FY witnessed:
  • NAV advance by £147m, from £244m to £391m, and; 
  • Cumulative dividends paid of £159m:

• Producing an extra £306m (£147m further NAV plus £159m cumulative dividends) from a beginning NAV of £244m over ten years equates to a compound annualised return of 8.5%.

• For additional perspective, the ten years to FY 2015 witnessed NAV advance £155m and dividends accumulate to £64m, equating to a ten.3% compound annualised return from the £132m beginning NAV…

• …whereas the ten years to FY 2007 witnessed NAV advance £111m and dividends accumulate to £36m, equating to a 13.0% compound annualised return from the £62m beginning NAV:

• The subsequent ten years repeating the aforementioned 8.5% annualised return could not enthuse potential buyers given:
  • MTWV’s ten-year returns have been declining over time, and;
  • Fastened-term money options now yield 5%-plus. 

• Maybe a reduction to NAV is now required to generate appropriate funding returns.

• For instance, my authentic MTVW buy occurred throughout 2011 when the £42 shares traded at 0.75x the then £55 per share NAV.

• Since then:
  • The market cap has superior by £230m, from £160m to £390m, and;
  • Cumulative dividends of £172m have been paid…

• …equating to an 11.0% annualised complete return since FY 2011.

• With out the market-cap re-rating from the then 0.75x NAV to immediately’s 1x NAV, my annualised return from that authentic £42 buy would have been 8.3%.

• May the “tough financial circumstances [that] could also be with us for some years” alongside an more and more despondent inventory market as soon as once more push the share value in direction of a 0.75x NAV a number of?

• The shares sank to £21 on the depths of the 2008 banking crash, giving consumers a 0.44x NAV a number of versus the then £48 per share NAV.

• At the least future returns from immediately are front-loaded by near-term dividend funds: 

• The illustrious unusual payout provides a 5.0% earnings at a £100 share value — the very best yield for no less than 30 years excluding the banking crash.

Maynard Paton