Town Centre Securities – bought for my net current asset value portfolio

One of the most shunned sectors of the stock market right now is property companies renting out to retailers. This made the sector the place to look for long-term bargains as Mr Market indiscriminately rejected anything to do with the high street. Mr Market is right to reject many property firms on the grounds of a poor risk-return ratio. But, having gone through the accounts of quite a few, I discovered the misunderstood Town Centre Securities (LSE:TOWN) selling at half price relative to net current asset value.


Maybe it’s the name that is so off-putting? It stands to reason, right, that a company with such a name must be vulnerable to the “collapse” of high street spending as we all shift online?
Well, looking at the detail on the property portfolio, I discovered that these days only 26% of the portfolio is in retail, and, of that, most is rented out to the likes of Waitrose, Wm Morrison, Home Bargains and Aldi – all without a CVA in sight.
True enough, another 21% is in town centre leisure such as gyms, restaurants, nightclubs, etc., but the rest is in solid offices (the largest rented to Leeds City Council accounting for 9% of the total portfolio), multi-story car parks, hotels and residential.
And they own much of Piccadilly Basin (near the railway station) in Manchester which is being developed in stages (mixed: residential, offices, retail).
All in all, development projects have the potential to be worth £600m; £300m of which is in Piccadilly Basin and £270m in Leeds city centre.
And this is for a company with a market capitalisation of £75.5m at my buying price of £1.426.
Net current asset value was £145.8m (£2.75 per share) calculated at
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