London Town
NO RECOMMENDATIONAs had been anticipated in its interim statement in September, property manager and adviser London Town is entering the student accommodation market, teaming up with Isle of Man-based investment company EPIC (the Equity Partnership Investment Company) to purchase SPF for £19m. SPF owns a portfolio of properties, situated close to universities across England, with a total annual rental income of £2m. London Town will receive 3% of this in fees for managing the properties, but will also own 70% of the share capital. £16.5m of the purchase price is being funded off balance sheet, in the form of debt from a subsidiary of the joint venture investment vehicle. However the transaction looks a sensible one, though investors should stay clear of London Town's shares until its results show an improvement from the £456,000 loss made in the 6 months to June. It also had gearing of 260% at the end of that period, which is excessive even for a property company.
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Market cap: £10.9m
PE Forecast: n/a
Share price: 125p
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