Terrace Hill moots fund launch

10/03/2010 Robert Tyerman

Property group Terrace Hill is ‘actively considering’ launching a residential fund after trimming annual losses to £27 million.

Chaired by entrepreneur Robert Adair, the Glasgow-based company, which has lately exchanged contracts to acquire supermarket development sites in Sunderland and Shropshire, saw net assets slide 23.5 per cent to 40.8p a share in the year to last October. But the second half of the year brought an upturn and Adair declares, 'I view the future with considerably more confidence than I did a year ago’.

AIM-quoted Terrace Hill’s net debt rose by £12.3 million to £98.1 million in 2008-09 and year-end cash fell from £18 million to £5.3 million, while its loan-to-value ratio increased from 45.7 to 59.4 per cent. The company completed or contracted sales of £56.1 million and contracted lettings with an annual rent roll of £3.6 million.

Late last year, Terrace Hill fixed £28 million of forward financing for a Sainsbury store in Co. Durham, won planning consent for 135,000 sq ft of offices and 33 flats near Victoria in London and arranged £39.3 million of debt refinancing, taking its re-financings since October 2008 to £335 million. In December, the company sold its Kean House office scheme in London’s Covent Garden for £16 million.

Adair says Terrace Hill’s residential portfolio continues to outperform industry benchmarks. He reveals the company is now seriously contemplating the launch of a residential fund, ‘which has the potential to provide further scope to create value’.

Floated in 1995 at £2, Terrace Hill shares have been historically dire performers, falling to 14p at one point over the past year. Now 20.25p, up 2p this morning, they value the company at £43 million and offer speculative recovery potential for the brave.