Highcroft Investments (LSE:HCFT), whose shares I bought recently at £8.75, has simple business model. So simple that it only requires six and half employees to run the £45m company. It buys and holds commercial buildings, mostly warehouses and retail warehouse, and rents them out. It occasionally sells a unit, usually when the property no longer fits the direction the managers want to go, e.g. in the last five years high street retail and residential have been sold off and small warehouses replaced with larger ones. In most years it buys an extra one or two units as cash accumulates and capital values of the existing portfolio rises.
Currently it has 22 properties with 30 tenants spread over 868,000 sq ft. Its units are 99% occupied; and that has been achieved after one of the worst ever periods for commercial property owners. Rent collection was 94% of that due in 2020.
In documents the directors emphasise their shareholder orientation. For example, the 2020 annual report stated: “Our strategy: Highcroft aims to deliver sustainable long-term income and capital growth for its shareholders through accretive asset management initiatives and recycling of capital in its regionally based property portfolio…
…Our actions are centred on our shareholders; investments are considered in order to execute our strategy and increase shareholder value.”
“To generate secure and sustainable income growth to drive a progressive dividend, which, when coupled together with capital value growth, will deliver strong total shareholder returns.”
It has the following the following strategic priorities:
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