Town Centre Securities – a good flow of profits and dividends over the years

The principle reason for buying shares (at 142.6p, MCap £75.5m) in Town Centre Securities (LSE:TOWN) is that they are selling at half net current asset value, even after adjusting downwards values of retail and leisure property assets – see earlier newsletters.  But TOWN also looks very good from the perspective of a deep value investor focused on its earnings and large pay outs to shareholders.   
Statutory earnings per share move around a lot from one year to another depending on revaluations of property and profit/losses on disposals.  The measure of EPS that strips out these volatile variables, “adjusted” or “underlying” earnings, and just concentrates on income flowing from the assets is much more stable at around 12p – 13p.
What is significant over the last decade is that the property valuation declines in 2019 (mainly caused by retail property falls) and in 2020 (caused by Covid-19 and further retail declines) wipe out all the gains made through valuation uplifts and realised capital gains of the previous eight years.
Thus, underlying EPS comes out as almost identical to statutory EPS at 12.4p per share – the upward and downward revaluations & gains/losses over the decade pretty well cancel out.
Net asset value per share has generally been in the region of £3 to £3.50. If 12.4p per share is earned on that asset base we have an effective yield after operational costs of 12.4p/350p = 3.5% to 12.4p/300p = 4.1%. 
This is disappointing and, in large part, explains Mr Market’s rejection of the share and why it is trading at half NAV.
Equally clearly, the director’s intention has been and will be to not rely on rental flows alone, but to develop sites to add realised capital gains and unrealised valuation gains to the profit pot each year.
Until the high street crisis of 2019 and 2020 they were doing a pretty good job of this.
If we take statutory earnings – including capital ​………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1