The Investment Column: Bradford Prop.

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The Independent Online
Bradford Prop.

THE ELDERLY and the poor make up the bulk of residential property company Bradford Property Trust's tenants, so it is no surprise it says it's a responsible landlord. Indeed, its fastest-growing business is buying homes from pensioners but letting them continue living there until the end of their lives, at which time it sells the property.

That may sound a bit dubious, but the activity is both safeguarded and popular. Many pensioners do not have anyone to whom to pass on their property; BPT's scheme allows them to receive cash without the upheaval of moving. As the state pension withers, BPT is perceived as providing a valuable service - although it never solicits such sales.

BPT's business is otherwise dominated by residential rental income. Sixty- five per cent of BPT's rents are regulated because the tenants are elderly or poor, even though the portfolio includes some flash premises in London's fashionable Knightsbridge.

Although regulated rents are lower than market rents, BPT continues to buy regulated tenancies - it spent pounds 71m in all on purchases last year - because it makes at least a 25 per cent gain on selling the property when it falls vacant. About 10 per cent of the portfolio is shuffled each year.

There are few people with BTP's experience in residential property. Its resources - an intimate knowledge of local housing markets and relationships with new housebuilders - cannot be replicated overnight.

Although BPT has solid long-term prospects, the real excitement is in its near-term potential should there be a sudden upswing in the housing market later this year, as the effect of low interest rates kicks in. It is the stock market's largest residential property player, and a few big headlines on record house prices could swing City sentiment back in favour of BPT. Analysts forecast a net asset value of about 300p this year. The shares, which closed up 6.5p at 265p, are undervalued.