Burford shares are hot property:The Investment Column

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The Independent Online
More than any other business, with the possible exception of the media, investment in quoted property companies is distorted by a cult of the personality. Some developers create a reputation for shrewd timing and astute purchases that bears little relation to reality but, while it lasts, gives them and their share prices an enormous leg-up, letting success breed on success.

Two of the sector's brightest wunderkinder at the moment are Burford's Nigel Wray and Nick Leslau, who yesterday announced the latest of a string of deals this year, buying a Glasgow shopping centre for pounds 16m. It was not a big deal in itself, but it cast the spotlight back on the duo, who have done their shareholders proud in the eight years since they lighted on the small ground rent collector and started transforming it into one of the sector's most significant players.

Burford's shares have more than doubled since the beginning of 1995 and risen fivefold in the past four years. A small number of hugely successful deals, such as the acquisition of the Trocadero, an underperforming leisure site in central London, have transformed the balance sheet, pushing net assets to more than eight times their level 10 years ago. Add to that the fact that the shares now trade at a premium to those assets (in anticipation of further growth) and shareholders have nothing to complain about.

The company operates on an Armageddon scenario which ensures that even if every tenant were to leave at the end of their lease and were not replaced, there would still be enough rent from other properties to pay the interest bill and keep the banks happy. It also has a self-imposed ceiling of 100 per cent gearing to stop things running out of control in the good times.

If anyone is to benefit from the expected upturn in the commercial property market, Wray and Leslau will. Good long-term value.

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