Copyright: David Lawson 1996
Chris Turner should be exhausted. He has rushed around 95% of quoted property companies since taking over the helm at TR Property Investment Trust last year. Far too many for his liking, and more than a few will have been asked why they merit a visit. But there is little sign of strain. The same quirky humour bubbles up; the same hunger for property gossip. Of course, he had a good training making the perennial rounds as an analyst with BZW before crossing over to TRPIT. That was confined mainly to the property elite, however, and he would probably admit to learning more in 15 months about the broad base of the industry than during a long and distinguished City career.
TRPIT spreads its net more widely, with 50% of fixed assets in chunks worth less than £1m. As an investment trust, the aim is to target particular asset areas to maximise performance - currently retail warehousing is the favourite - and dig around for undervalued shares. This can provide other fund managers with a liquid stake in areas they might normally overlook. The spread is not quite as wide as in the past, however. Turner came in with a brief to rationalise, and holdings in companies worth less than £100m had fallen from 74% to just under 60% of the portfolio by the end of the last financial year in March.
But there has been little sign of the much-anticipated banging together of heads to cut down on the unwieldy number of small companies in the sector. This is a tub Turner often thumped as an analyst. So did Alastair Ross Goobey, heavyweight boss of Hermes Pension Management and a key member of the TRPIT board. 'We have encouraged people behind the scenes to consider mergers but you can waste an enormous amount of time if chairmen refuse to listen,' he says.
Instead, he has concentrated on dropping laggards and concentrating on those which promise to outperform the sector. Giants like Land Securities get little attention because they have such wide portfolios that it is difficult to target promising asset areas. Talent-spotting smaller companies is turning up trumps, however.
TRPIT has built a 10% holding in Freeport Leisure, the factory outlet specialist, which announced an eightfold boom in profits to more than £875,000 last month. Edge Properties, nursed onto the market by TRPIT through a reversal into BDA early this year, has just announced a £500,000 surplus for the six months to June and boosted the portfolio with a £17.5m purchase of Battery Retail Park in Birmingham.. A good slug of that will go to TRPIT, which still owns almost 30% of the firm.
Joint chief executives Nick Vetch and Phil Burks were proteges of former manager Peter Duffy, who spotted the potential of their expertise in retail warehousing as a way into this expanding sector. Turner is following the same pattern. Regeneration specialist Compco has been added to the list, rewarding the trust's 10% stake with a booming share price. Safeland, the north London trader is another performer.
Dencora would probably never have merited a mention in Turner's years as an analyst, a smallish company regional company which rarely caused waves. In fact, profits announced last week showed a fall in the first half of this year. 'But I was impressed by their latest deals,' says Turner. These include a 'modest' outlay to secure the 55,762sq m(600,000 sq ft) Shell Research complex at Sittingbourne, Kent.
This trawl among the minnows does not preclude interests in some big names. Helical Bar remained the trust's biggest holding despite a modest recent record. And it duely returned the favour by announcing increased half-year profits of £4.36m last week. But this is another bet on an asset sector (Helical is strong on retail parks) and talented management.
Chelsfield and Fiscal, two more at the top of the list, are in the same mould, and both have just produced similarly impressive figures - as have as have TBI, Peel and Burford, while Derwent Valley's shares have soared to an annual high. It has all been enough to push TRPIT's own shares to a yearly peak of 33p last week. The reduction in discount on the £38m of net assets from 20% to 12% in a year might not seem outstanding in the property sector. But this has to be set against other investment trusts, where the gap has widened.
What happens next? Still an analyst at heart, Turner suggests that money supply rather than economic growth is a indicator that property of the recovery in property. 'Commercial property has also followed houses prices after an 18-month lag,' he says. So he will be keeping one eye on the FTSE and the other on the Halifax index. But they are possibly looking a bit further at the moment: a small matter of 60 foreign holdings to check out.
'I still haven't got out of the country,' he moans. It's a hard life being a fund manager.