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Burford joins Japanese to create brave new Segaworld

Burford Holdings, the fast-growing property investment company, is tying up with Sega, the Japanese entertainment group, to develop Europe's first high-technology indoor theme park at one of London's busiest tourist attractions.

Segaworld will occupy 100,000 square feet of the Trocadero, the troubled leisure complex. Burford acquired the Trocadero in September, from the receivers to the failed Power Corporation of Ireland, for £94m. The site, on one of Europe's busiest tourist thoroughfares, has failed to make money for many previous owners.

The creation of the Sega theme park, the first outside Japan, is dependent on Westminster Council agreeing to a change of use for space previously earmarked for offices.

If approved, the indoor park will provide six main interactive rides, a carnival area, a sports zone, theme restaurants and shopping. Existing tenants in the Trocadero include the Planet Hollywood restaurant and a seven-screen MGM cinema.

The acquisition of the Trocadero last year was the most challenging deal for a company whose record of buying problem sites cheaply and selling at the top of the market has seen its market value rise from £8m at flotation in 1987 to more than £300m at its peak last year.

Burford was one of the few property companies to see the crash coming in the 1980s and sold out between 1988 and 1990 to see it through the recession with a cushion of net cash.

The company then started buying properties on attractive yields of more than 10 per cent in 1990. The market warmed to the entrepreneurial company and in 1993 and 1994 backed two sizeable rights issues which had been priced at a premium to Burford's net asset value, an unusual sign of confidence.

Between 1988 and 1993 Burford's net assets grew by almost 60 per cent despite a fall in the market's asset value of about 16 per cent. During that period its dividend grew by a compound 25 per cent a year.

The Trocadero was a brave move for Burford given its graveyard history for previous owners. The first victim was the electricity industry's pension fund, ESN, which gave up work on renovating the site near Piccadilly Circus after costs spiralled to double the initial estimate. ESN sold the Trocadero to Brent Walker, which formed a joint venture with Power Corporation. Power bought Brent Walker out but a receiver was called in after consent to change use was denied.

Burford's shares closed up 3p at 90p, lower than last year's peak of 113p but almost three times their value two years ago.