Over the years I have reaped rewards by selectively stock picking in the real estate sector. The past year has been no different and I am revisiting five of my sector plays, all of which have been in the news.
Investors have been warming to the investment attractions of Urban&Civic (UANC:265p), a listed property group specialising in strategic residential land developments. The shares have risen by 25 per cent since I outlined a strong case to buy at 215p just before Christmas ('Built for gains', 19 December 2016), buoyed by a bullish set of results much as I had anticipated when I subsequently advised buying at 239.5p ('Taking profits and running gains', 4 April 2017). It’s only fair to acknowledge that the holding is now only back to the entry level at which I initiated coverage (‘Plotting a break-out’, 15 October 2015), and that’s after factoring in 5.75p a share of dividends paid out, having taken a major knock last summer post the EU Referendum. However, it’s clear that this year’s re-rating is more than justified.
That’s because the company’s EPRA net asset value (NAV), which increased by 8 per cent to 293p a share in the 12 months to end March 2017, should post significant gains in the future given that unserviced residential EPRA values at the company’s 1,432 acre freehold site at Alconbury Weald, incorporating Cambridgeshire's Enterprise Zone with permission for 5,000 homes, are only in the books at £25,300 per plot based on an average house price of £290 per sq ft. The most recent land parcels have been sold at more than double this valuation.