Caledonian Trust – update on property values at December 2016

PUBLISHED: Apr 26 2017 @ 03:37 | Comments (0) |

Publication of the interim results to December 2016 give us an opportunity to estimate the values of the various plots, houses and other property owned by Caledonian Trust (LSE:CNN), one of my net current asset value shares, to compare with its current market capitalisation of £14.2m (£1.20 per share x 11.8m shares). Note that the company has liabilities of only £4.8m.

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Such an estimate is fraught with danger. Indeed, individual asset valuations shown below 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 – £300 per sqft,). For the assets listed in the table I have made a very rough and ready estimate of value based on the following:
•Plots, barns with permission to build or convert, or offices already built, are valued at £80 per square foot. For Edinburgh office space unbuilt but with planning permission £40 per sqft. 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 CNN undertook the build and then sold as completed houses).
•Planning permission applied for but not yet achieved is valued at £10 sqft of house space.
•Land is valued at £10,000 per acre. 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.

(Previous Newsletters on Caledonian Trust: 6th – 12th Jan 2015, 4th – 6th Jan 2-16, 1st Feb 2016, 9th – 11th Jan 2017, 30th Jan 2017)

Sites with planning consent		Estimated value in December 2016: £80 sqft for consented, £10 sqft if without consent
St Margaret’s House, London Road, Edinburgh	0.74 hectares. Currently 92,000 sqft offices + 168 parking spaces. Market rental £0.5m pa. PP for flats for sale, and/or private rented flats and/or students and/or offices (231,000 sqft). Also “Part of the site is ideal for a hotel”. 2016 Report: “the Company intends either to develop or undertake a joint venture development of St Margaret’s or, if suitable offers are made, to realise its value”	£7.4m

Brunstane Home Farm, East Edinburgh	Pair of semis built (2,850sqft, £0.8m) + PP for 10 houses, of which 5 nearly completed and 5 scheduled to start build soon (14,648sqft) + Georgian steading + rundown cottage + detached stone building with consent for conversion and extension (3,226 sqft) + Proposals for a two-acre site, “have been accepted in principle” for 19 new-build houses (25,149 sqft) + “lodged a planning application for an extensive residential development”. Dec 2016 Interim Report: “Given the buoyancy in the market, I expect to continue the development once further work is complete at Brunstane.”	2016 Report: “I expect the sales value of this Horsemill refurbishment and the new Stackyard [the 10 houses, I think] to be around GBP4.5m.” £0.8m + £4.5m minus £1.3m build costs of 5 houses + £0.5m + £0.1m + £0.3m + £0.2m + ? = £5.1m

Wallyford	PP for 6 detached + 4 semis (12,496sqft)	£1m

Belford Rd, Central Edinburgh	22,500sqft of offices or 21,000sqft for 20 flats 2016 Report: “we will seek to commence the development with a value in excess of £10m [when completed] next year.”	Dec 2016 Interim Report: “We are currently assessing development and financing options for a Gross Development Value of about £10m.” My estimated sale value as it is: £3.5m

Dunglass	PP for 48 house plots. 2016 report: “We intend to build a few houses there in order establish demand, … I expect the results will allow us to develop the whole site, but at a modest build rate.” Possibility of another 30 houses: “the ground conditions, which initially appeared to preclude development, may be remediated”.	£3.8m

Hazeldean	PP for 28 house plots	£2.2m

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