London Town

As 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.

Sector: General Financial

Companies: London Town

Market cap: £10.9m

PE Forecast: n/a

Share price: 125p

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