Recent IPO with long-term prospects Belvoir Lettings PLC came to AIM in February 2012. The company is a franchisor of residential lettings businesses. Founded in 1995, Belvoir Lettings today has over 160 offices across the UK. The dynamics of the UK housing market point toward strong long-term growth from this sector. Belvoir runs a residential lettings franchise ‘Belvoir!’. Belvoir revenues come from an initial franchise fee plus service fees which are a percentage of the franchisee’s monthly turnover. The plc also provides its franchisees with training and support. One example is the Belvoir Lettings mobile app. A mentoring service is also provided in the early stage of operations. Tenants contract with the franchisee directly, not Belvoir, meaning that Belvoir only carries reputational risk.
a business model that has served shareholders well It is a business model that has served shareholders well. In 2008, Belvoir reported a net profit of £0.7m from £3.4m of sales. By 2013, Belvoir was delivering sales of £5.8m and a net profit of £1.2m. The company paid its maiden dividend in 2012, delivering a 17% increase the following year. Some of this growth has been achieved through acquisition. Here, 10
existing franchisees, often with some finance assistance from Belvoir, have acquired competitors and brought their portfolio under the Belvoir umbrella. In July last year, Belvoir announced additions to portfolios in London, Ipswich and Telford. A similar transaction took place in Hereford earlier this summer.
strong progress across the board In September 2013, Belvoir launched a residential sales pilot, utilising the traditional lettings offices. There is a certain logic to this. A lettings business’ clients will frequently be looking for new properties (even with tenants in situ) and may seek to trim their own portfolio from timeto-time. In March, Belvoir reported a favourable response to this trial. The most recent results from the company (March’s finals) showed strong progress across the board. Revenues were 44% ahead of the previous year and pre-tax profit was 16% higher. The dividend was raised 17%.
set for long-term growth. While 15% of all UK homes are rented today, some government estimates are for this figure to reach 20% within the next eight years. Rental’s ability to grow with the economy has attracted large, long-term investors, such as Legal & General, to the sector. In March this year, L&G announced that it had secured a portfolio of 4,000 units. AIM Prospector has previously reported on AIM-quoted Sigma Capital’s plans on a similar scale in the North-West. The quality of this income stream is manifested in the dividends paid out by Belvoir. The consensus is for Belvoir to pay a 6.8p dividend for 2014, equating to a very attractive yield. Private residential renting is here to stay. Belvoir looks a great way to access this. Belvoir Lettings (LON:BLV) FOR Strong industry dynamics Attractive yield AGAINST Interest rate rises could scare market
consensus is for Belvoir to pay a 6.8p dividend
High P/E Market cap Bid:offer
With continued immigration to the UK and the high price of home ownership, private residential letting looks
P/E (forecast) Yield (forecast) 52week low:high
£30m 124p:130p 19.6 5.4 110p:195p
Published on Sep 2, 2014