The Investment Column: Fast-moving Compco builds on opportunities

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The Independent Online
ROBERT NADLER, joint chief executive of property group Compco, says the group's approach to the property market is "opportunistic".

Compco has no plans to grow rapidly by acquisition and no particular target locations in which to buy. But opportunities are obviously hard to predict, and investors should look to Compco's track record to gauge its ability to capitalise on them.

Yesterday's full-year results suggest that Compco's growth run since coming to market in 1995 is down to more than just luck. Last year it lifted net asset value per share by 21 per cent to 256p. Rental income jumped by 28 per cent to pounds 10.1m. Earnings per share, despite a placing to fund acquisitions, rose by 20 per cent to 17.6p. Compco now has around pounds 113m of properties that provide rent and which it describes as long-term investments. It has a further pounds 24m of short-term assets.

While Mr Nadler admits his business is mainly buying sows' ears and turning them into silk purses, making commercial property investments grow isn't just a matter of buying a derelict warehouse and giving it a lick of paint. Compco's competitive edge lies in the speed with which it closes its deals, creating a valuable reputation for taking a view and acting quickly on it. It took just 24 hours for Compco to decide to sell a London property for pounds 4.5m which it had bought for pounds 3m only months earlier - even though it had issued shares to achieve the purchase and intended to hold the property.

That typifies the Compco philosophy - "buy at yesterday's prices, sell at tomorrow's" - and the group is now looking at developments outside its traditional heartland of London's West End.

Despite the successful deals, Compco pledges to grow organically. It is wary of devaluing its paper by issuing more shares to make acquisitions; its shares fell 100p the last time it approached the City. So investors should not expect it to leap from a pounds 100m to a pounds 500m company in a matter of years.

Even so, unlike almost all its sector peers, Compco trades on a premium to its net asset value. That looks generous; Compco has yet to have the benchmark five-year growth record property companies need for credibility.

But Compco has done little wrong yet and, geared at only 55 per cent, it is well placed for future growth. The rating is deserved and the shares, which fell 1p to 302.5p, are good value on analysts' expectations of a net asset value of 340p this year.