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Maybe Monty888, but it was only in the balance sheet at £10.5m when it was sold, and you cannot possibly think that 2.2 acres of Battersea is only worth £10.5m, whatever it use?
I'm not suggesting the total retained property valuation of £290m is only 35% of true value, but I am suggesting it is substantially conservative.
If it was sold for £28m net without any rental agreement then it’s real value would indeed be £28m however that’s not the case and it’s all wooden money in reality. But yes it does flatter the balance sheet and properties and cash less debt so give a nice NavPS but it’s not as clean as it looks in reality. However as I keep harpin on (boring I am) if Constellation paid 102p per share a few months back in a normal market we are worth more, my Spence is 115p fair value. I do also think we are vulnerable to a takeover at less than 102p.
I agree. This is as close to free (or less than free) money as you will ever find.
With 91p per share in property and cash, the business is now valued neagtively even though it is highly profitable and ' exceeds expectations'. Looking for an uplift here today.
I disagree. No sale and leaseback freehold purchase is going to proceed without evidence of underlying value.
There is plenty of evidence that 2.2 acres of land in Battersea is intrinsically worth very much more than £10.5m.
And my point is that it we have no evidence whatsoever that freehold was or is worth £28m. The waters are completely muddied by the leaseback side of the deal, the freehold without a top paying tenant attached could well really be worth £10m (or less).
I'm not advocation sale and leaseback.
My point was that if they were able to sell a freehold asset valued at £10.5m in their books for £28, the £290m freehold valuation of their retained sites is likely be be very conservative.
Re "Don't forget they recently sold a Chiswick freehold with a book value of £10.5m for £28m"
I don't think that transaction offers the comfort you think it does. Recall they also agreed to pay rent of an initial £1.25m for 20 years, which totals at least £25m over the term. By the time we've allowed for rent increases it looks very much like borrowing £28m, paying it back with interest and throwing in the freehold.
No, I don't buy that Monty.
If I could raise £280m, I'd but it without hesitation
Sell the property, be debt free, lease it back for £15m and be left with a £45m profit.
Don't forget they recently sold a Chiswick freehold with a book value of £10.5m for £28m.
Market cap £280m, net profit £61m. property It’s cheap but doesn’t have assets above debt negative at all. Note £40m debt at increasing costs to service Net funds over debt of only £3m. Keep it real and stop over hyping please.
Removing the value of its property, the business of Lookers plc, which made £61m post tax profit last year, is today valued at NEGATIVE £18m.
£90m pre tax, £61.2m post tax.
Either way, it is absurd that the business now has a negative value placed on it.
Actually it’s £61.2M net profit, not £80M. Yes it’s still an undervalued share as are many today. When the tide goes out all the boats sit lower in the water. A lot further to fall I fear….
This is a business that is making a profit £80m a year, and which has a market cap in excess of its freehold values of zero.
An £80m annual profit - for nothing!