Christmas Stock Picks: Max Property

There has been much debate about how real the trumpeted revival in property will prove to be. Low interest rates and supply shortages, along with a possible comeback of inflation, argue in favour, while lenders’ persisting caution and a potentially large overhang of property deals from under which the banks are as yet too scared to pull the rug argue against.

That is why it makes sense to back someone with a track record for timing in the sector who is back in the public market to exploit commercial property bargains left over from the economic downturn. Such a one is Nick Leslau, who has made a fortune with his Prestbury Investments property vehicle and floated Jersey-incorporated Max Property Group on AIM last May with a £220 million fundraising at £1.

Prestbury advises Max and the successful Prestbury team has a significant stake in the company, which spent £227 million buying diversified industrial properties from the receivers of the collapsed Industrious Group. Max took a £128 million non-recourse loan from a German bank to fund part of the deal, which still left it with £110 million of free cash, and said the initial yield on the predominantly freehold portfolio would be a handsome 10.3 per cent after running costs.

Max’s stated policy is to invest over a five-year period. After that, the company says it will not look for more acquisitions, but will manage and realise its assets so as to make a final return to shareholders after an investment cycle that Max says it expects to be seven and a half years from its AIM float date. Worth a dabble at 117p.