Caledonian Trust – rough estimates of the asset values

PUBLISHED: Jan 05 2016 @ 04:54 | Comments (0) |

Caledonian Trust (LSE:CNN) owns substantial plots of land with planning permission to build houses (or offices). The true value of these plots is not reflected in the balance sheet because accounting rules dictate that property held for trading is valued at the lower of cost of net realisable value.

Thus we need to estimate the current real value. This process is fraught with difficulty being based on best guesses, but we only need to get an approximate figure to judge whether there is sufficient margin of safety when our estimate is compared with the current market capitalisation.

In the list of assets in the table I have made a very rough and ready estimate of value based on the following notions:

• Plots or barns with permission to build or convert are valued at £80 per square foot. That is, my guess of what they could be sold for (on average) as plots or unconverted farm buildings (more value might be available if CT undertook the build and then sold as completed houses).

• Planning permission applied for but not yet achieved is valued at £10 per square foot of house space.

• Land is valued at £10,000 per acre.

Individual asset valuations are bound to be wrong (by a large margin in many cases), so do not take them too seriously, but I hope that in averaging-out we have a reasonably accurate minimum value of the company’s assets. I think these are conservative assumptions (as I understand commuter belt houses around Edinburgh sell for £200 – £250 per sqft,).

Bear in mind that I have not allowed for any success in persuading councils to include acres of farmland in local plans, e.g. the 200 acres at Gartshore where “proposals have been prepared for a village of several hundred cottages and houses together with local amenities, all within the existing landscape setting”. If these proposals are accepted then the value of the company becomes a multiple of its current MCap. – a real bonanza.

Those sites with planning consent Estimated value in June 2015: £80 sqft for consented, £10 sqft if without consent
St Margaret’s House 92,000sqft + 168 parking spaces. Market rental £500,000+ pa.

PP for flats for sale, and/or private rented flats and/or students and/or offices £7,360,000

Brunstane Home Farm 6 houses + PP for 10 houses + PP in principle for 15-25 houses. In all 14,648sqft £1,171,480
Steading at Braunstane Needs renovation £3,000,000
Wallyford…….

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