DevSecs confident as NAV rises

Development Securities, co-owner of the Manchester Evening News Arena, the largest indoor venue in Europe, said the asset's value increased by 19.8% in 2010.

The developer and investors acquired the 21,000-seat arena in June last year with Patron Capital Partners, for £66.2m. Patron owns 70% and DevSecs 30% as well as having the management contract.

DevSecs' interests around the region include leisure premises let to Apollo Cinemas in Burnley, the Axis office tower JV with Property Alliance Group in central Manchester and the new Booths supermarket development in Hale Barns.

The publicly listed company said pre-tax profit was £2.6m for the year ended 31 December 2010 compared to a loss before tax of £11.4m for 2009.

Shareholder funds benefited from £100.2m issue of new equity in July 2010. Net assets at year-end were £333.1m, up from £244.0m at the end of the previous year. Gearing, or borrowing as a proportion of shareholders' funds, rose from 23.9% to 27.7%.

Group acquisitions total £233.6m since July 2009. Returns from its investment property portfolio was 15.2% in 2010.

David Jenkins, chairman of DevSecs, said: "Monetary policy is hard to predict, perhaps even by those who pull the levers, but we do anticipate that interest rates will remain at minimal levels for some time yet to come. It is quite likely that both the Government and the Bank of England will seek to maintain interest rates at around current levels as and until stronger economic growth in the UK is initiated.

"To date, the two major domestic UK banking groups with significant government equity ownership have only gradually released troubled loans and foreclosed real estate into the market and it is arguable that this has had minimal impact on pricing such has been the strength of investor demand for product. It would appear that these UK banking groups have now realised the value from the larger, better located and better let properties and that the next few years will see them work harder to maintain the same level of capital release from smaller loans. It perhaps follows that the next tranche of loans to be realised by the banks will be within the secondary rather than the prime sector. The availability of capital to acquire these assets will be reduced since investors with an appetite for prime property are unlikely to have the same risk profile on assets which are noticeably inferior in terms of location, tenant covenant strength and lease maturity profile."

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