Caledonian Trust – Estimate of value today

PUBLISHED: Feb 08 2018 @ 09:26 | Comments (0) |

Caledonian Trust’s shares (LSE:CNN) have risen by 157% since I bought in 2013 – and, still they are not trading at my conservative estimate of net current asset value, NCAV. Today I’ll show both the official balance sheet and my estimate of its property assets.

© v 126 flickr BY 36270977@N08 4486547809 1

The official balance sheet

		£000s
Investment property		12,080
Trading property		11,633
Other assets		462
minus total liabilities		-5,120
Net assets		19,055

Given that virtually all assets are property development sites I will regard these as current assets available for sale, and so balance sheet net current asset as the same as BS NAV at £19m, or 161.71p per share. Current market capitalisation is more than this at £23m (share price 195p).

But, while investment property is calculated at fair value estimates provided by external valuers in June 2016 and then adjusted for market movements in the period to June 2017, trading property is carried at the lower of cost and net realisable value, and so is totally out of touch with market value.

My valuation

In what follows I have been forced to make assumptions. I think these are conservative assumptions (as I understand commuter belt houses around Edinburgh sell for £250 – £300 per sqft,), but nevertheless you should read the numbers with a large pinch of salt.

My intention is not to draw up precise calculations for an individual site, but to give a rough and ready estimate of value overall, hoping that any over-valuation on one site is offset by undervaluation elsewhere.

The valuations assume:

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.

Sites with planning consent		Estimated value December 2017
St Margaret’s House, 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”.	Agreed sale (next year) £15m

Brunstane Home Farm, East Edinburgh	One house complete + Pair of semis almost complete (3,000 sqft priced at £435,000 and £445,000) + PP for 10 homes within Georgian steading and an attached house (14,648sqft “development value of over £4.5m” five complete, 5 started) + 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). 2017 Report: “Development at Braunstane has become increasingly attractive but the realisation of its great potential has been delayed”	£0.4m + £0.9m + £4.5m minus £1.3m build costs + £0.5m + £2m = £7m

Wallyford	PP for 6 detached + 4 semis (12,496sqft)	“we intend to continue the development in ….but this has been delayed” £1m

Belford Rd, Central Edinburgh	22,500sqft of offices or 21,000sqft for 20 flats	Dec 2017 report: “Development value is likely to exceed £11m…we aim to commence development as soon as possible” My estimated sale value in current state: £3.5m

North Castle Street, Edinburgh	Offices occupied by Caledonian Trust managers. Surplus

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