Wait for a pick-up in the West End before piling into Great Portland

Helphire worth holding amid business upswing; Hang on to Paragon as lending and profits rise

Great Portland Estates was once a sleepy, old-style property company that simply sat on its assets and collected the rents. The portfolio, which is concentrated in London's West End, needed investment and the group lacked a growth strategy.

However, under new management, led by Toby Courtauld, the chief executive, it is being energetically shaken up. Mr Courtauld, aged just 34, joined in April and is determined to transform the poor portfolio and turn the company into a buyer and seller of assets, with a fairly rapid turnover of stock.

The company has bought back £130m of expensive fixed rate debt (taking a one-off £66m hit in the process and denting the net asset value, or NAV, per share) and it has sold off £122m worth of its underperforming property assets.

However, Great Portland is battling against falling rents and market values of property in the West End and City – a headache for the whole industry. Yesterday Great Portland reported net assets per share had fallen 12 per cent to 307p over the six months to September, and even excluding the costs of the debt buy-back, the underlying value of the portfolio fell 4.8 per cent.

Falls in rents and values have some way to go, although already, between the third quarter of 2001 and today, rents are down some 21 per cent in the West End, at £65 a sq ft. This is more of an issue for Great Portland than some rivals, as its leases have on average just 7.5 years to run. That is, it is going to have to fill a bigger proportion of its properties at the prevailing low rents.

Of course, the market situation also presents an opportunity to buy assets cheaply. Given the disposals made and the unstretched debt position, the company reckons it has £240m of firepower. It will use this to buy up development sites, which it will plan to have ready in time for the upturn.

An intriguing part of the Great Portland story is the 13 per cent stake held by its rival Liberty. There have long been rumours of a bid, though the overwhelming likelihood is that Liberty will hold off while the market situation is continuing to deteriorate. Analysts expect the second six months of the financial year to see a further drop of about 5 per cent in the value of the portfolio.

The time to buy into Great Portland would be when signs emerge of a market rebound in the West End. The real upside comes from the group's development and refurbishment programme and to see the full benefits here will take till 2004 or later. There's no rush.

Helphire worth holding amid business upswing

Bit of a balls-up with the Helphire results yesterday. They mention "the announcement of the deal with DAS". There was puzzlement all round, since there had been no such announcement. It took until 3.30pm before an explanation arrived, in the form of a holding statement explaining that a deal with the legal expenses insurer DAS Group is almost ready, but not quite, since DAS needs to agree terms for paying off its previous partner.

Helphire supplies hire cars to drivers involved in accidents that weren't their fault, then claims the costs back from insurers. DAS offers replacement cars to its 3 million policyholders, so Helphire stands to gain plenty of business if the deal is signed off.

Indeed Helphire has done numerous such tie-ups in the past 18 months, since it abandoned its confrontational approach to claiming cash from insurers and started pre-agreeing hire car rates with them. The volume of business in the period from April to September this year was 75 per cent higher than in 2001 as a result, and pre-tax profit was £1.8m, compared with a loss of £1.1m.

The slippery roads of winter should ensure an even better second half to its financial year and brokers reckon it is on course for £6m of profit.

There is everything to go for. There are a million accidents in the UK every year and so far Helphire supplies a replacement car in just 35,000 cases. A dramatic upswing in business is still in its early stages and Helphire's shares, even after rising 13 per cent yesterday to 164.5p, are worth holding.

Hang on to Paragon as lending and profits rise

The buy-to-let market is not about to crash. Paragon, which supplies consumer credit, car finance and buy-to-let mortgages, is entirely confident on this point. The justification, in the group's annual results statement yesterday, bears repeating:

"From the evidence of our survey data, the market fundamentals remain favourable. This appears at odds with media reports, but may be a consequence of the greater emphasis of the media on novice property investors and on high-profile metropolitan locations," it says.

Paragon's client base of mainly "professional landlords" (who own an average of 10 properties worth just £70,000 apiece, almost entirely outside property hot spots) plan to increase their property investment by 16 per cent in the next year. Maybe that will come to pass, but maybe they are simply in the grip of a more sophisticated form of the property mania that has driven amateurs into buy-to-let. With the worst bear market in equities in a generation, property has been a great investment. Paragon lent £563.6m in mortgages in the year to 30 September, 48 per cent more than the year before; it is unlikely to match that if property prices level off – or worse.

With consumers' willingness to spend on credit also continuing to surge, Paragon's other lending activity was also up and pre-tax profits jumped 12 per cent to £46.0m.

The company has been preparing for an economic slowdown for some two years now, and has upped the proportion of secured lending at the expense of unsecured loans and so far bad debts have been modest. Paragon is a sensible company, but the fall in its shares this year has not been unjustified. Its growth is at risk.

The shares do have some underpinning at these levels though. At 220.5p, up 8p yesterday, it is on a multiple of 1.3 times its book value, which is cheap. It has also promised a series of dividend hikes. Hold.