Newsletter 54 – Caledonian Trust - An old favourite

​I first bought into Caledonian Trust, a small Edinburgh property developer, in July 2013 at 70p.  They have almost doubled to 134p.  Despite the rise I looked at the company as if for the first time last week, and concluded that even at 134p it meets the criteria for a net current asset value (NCAV) share, and so I bought some more.
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It might be helpful to first repost here my original analysis from a July 2013 post (put on my personal website). In those dark days there was much uncertainty about a property recovery outside of London.  Other blogs will follow to update the numbers, including a more detailed look at the property it owns.

2013 Analysis

I need help with this one. It has a market capitalisation of £7.7m and investment properties (long term lets) of £8.1m.

In addition it has a portfolio of properties (something like two dozen sites) described as for ‘trading’. These are valued at the lower of cost or net realisable value, which is very significant as the open market value may be much more.

The balance sheet values of the trading properties are £11.6m.

Total liabilities are £3.2m. There are a few small items, leaving NAV at £16.9m and net current asset value at £8.8m.

It seems to pass the first test of Benjamin Graham’s net current asset value investing. This reported balance sheet looks nice enough, but also consider the achievement of the management over the past five years. They might not have reported profit but they have created value by obtaining planning permissions on the properties. Here are some examples:

• St Margaret’s House, Edinburgh. Currently 92,000 ft2 office building occupied by a charity on low rent and sublet to 250 artists. Parking spaces (120) let separately. In Sept 2011 permission was granted for 231,000ft2 of residential and/or student + hotel + offices + 225 parking spaces. [update: I now understand this to be the extent of a project combining land owned by a number of organisations, not just CT.  See potential redevelopment at: http://www.urbanrealm.com/news/5207/Fresh_bid_to_redevelop_Edinburgh%E2%80%99s_St_Margaret%E2%80%99s_House.html]
• Brunstane Home Farm, East Edinburgh. 3 Georgian Cottages for sale + consent to convert Georgian steading and reconstruct cottage + 10 houses + detached farmhouse + 2 acres of land.
• Belford Road, Edinburgh. Cul-de-sac 500m from Charlotte Sq and the west end of Princes St. Consent for 22,500 ft2 office + 14 car spaces or 20 flats + cars.
• Wallyford, Muselburgh. Building 5 detached + 4 terrace
• Tamperion, Comrie. Smallholding. Consent for 12 detached houses
• Chance Inn. Consent for 10 houses + upgrade of house
• Strathray. 2 large detached + mansion
• Fife. Cottage + 8 houses
• Gartshore, 7 miles from central Glasgow. 120 acres of farmland, 80 acres of policies and tree-lined parks. Georgian pigeonnier + Victorian cottages and other buildings.
• Ardpatrick. ‘prospects for residential property extremely good’. Consent to change the use of ‘keepers’ and bothy. Being marketed. Plus ‘secluded sites – applying for planning’
• Shore Road. Consent for house + 2 others
• Frithfield. Applying for 12 houses

Many other sites without planning permission. YET.
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In the next newsletter I'll explain why it's OK that there are no profits.