Conygar Investments poised to pounce  

Conservatism pays at this stage in the property cycle. Robert Ware, chief executive of acquisitive Conygar Investments, is so far keeping most of his powder dry after reassuring interim results, despite sitting on £98 million cash and bank facilities.  

‘We are unashamedly opportunistic, but not gamblers,’ he declares. The shake-out in the sector following the financial debacle of three to four years ago is taking longer than he and other players originally expected, but he insists ‘we are content to wait patiently for the considerable amount of property stock to emerge that is necessary for the inevitable de-leveraging’.

At a time when most analysts and market participants believe that many banks are still ‘in denial’ over the need to refinance property loans at values adjusted to reflect the passing of the boom times when many were advanced, AIM-quoted Conygar is busying itself with promising developments in Wales and elsewhere. The company increased net asset value a modest 2.7 per cent to 154p a share in the six months to March.

For the time being, Ware says Conygar prefers to focus outside the most prime London market, which is driven by international ‘funk’ money and other idiosyncratic factors. He argues that developers and banks still need to scale back their price expectations drastically and offer costly blandishments to potential commercial tenants, ahead of an eventual recognition of the remaining need to write down their property loans significantly.

Interim pre-tax profits halved to £3.4 million, but the prior-year figure included a £5.8 million gain on selling investment properties, without which the latest first-half profit would represent a threefold increase. Conygar cut finance costs 56 per cent to £2.2 million, helped by more than halving the coupon on its interest rate swaps to 2.38 per cent.

Citing unsuccessful sale attempts by property owners, Ware suggests that 14 property portfolios are currently ‘doing the rounds’, with prices ranging from £20 million to £200 million. All of these in his view represent a ‘40 per cent over-valuation’.

However, when the time is right, Ware says Conygar will move fast. The company is eyeing two possible deals in London involving cash-strapped companies with promising assets.

Elsewhere, Conygar paid £14 million late last year for 86 acres in Haverfordwest, Pembrokeshire, with outline planning permission for 900 ‘residential units’. The company expects a detailed planning application to be submitted by the end of the year and recently opened negotiations with a ‘leading residential developer’, while there are understood to be hopes that a supermarket will take a slice, too. Other projects include a mixed residential and commercial marina development in Holyhead and a lorry park in the same town. Bulls argue that Conygar has a present net asset value of 150p to 200p a share.

That compares with a current market price of 110.25p, with a yield of nearly 1 per cent. The company pursues a policy of buying back its shares in poor market conditions, having spent £13.67 million during the first six months repurchasing 9.8 per cent of its capital at an average 115.6p and more recently bought in some more for nearly £2 million at 115.5p.

The company’s blend of opportunism and conservatism augurs well for Conygar shares over the medium to long term.