Wednesday, December 12, 2007

Ripe for shorting ?

GRAINGER (GRI.L)

"Working in the real estate sector since 1912, the group experienced its strongest period of growth after the Second World War, when it bought damaged and disused industrial property that it renovated to provide housing. And when we know the price of the average rent in London, it is not hard to understand how attractive this form of speculation can be.On the one hand, Grainger is a landlord, renting out property (housing and offices among others) while on the other hand it works as a property developer across the whole of Great Britain."

Posted by doomwatch @ 12:46 PM (588 views)
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One thought on “Ripe for shorting ?

  • Nice find, doomwatch! These guys are the UK’s largest listed residential property owners, with 14,000 properties in the UK and a further 4,520 in Germany. Most are proper houses, not Liverpool-style executive apartments. These guys have been in the business since 1912 so they know what they’re doing. Their share price has already fallen from last year’s peak of nearly 700p to today’s 370p – how much more downside there can be?

    Looking at their preliminary results for the year ending Sept 2007, dividend was 6.18p. That’s a terrible yield. On the other hand even the lowest estimate of their Net Asset Value is 613p per share which means it’s highly undervalued compared to book value! The markets have effectively already priced in a huge fall in the value of its assets, expecting at least a 40% drop.

    They also do “home reversion plans” in association with Norwich Union – basically they buy your house and rent it back to you. See: http://www.nuequityrelease.co.uk/nu-products/home-revision-plan.htm

    I expect this company’s share price will get battered along with all the other property stocks, as it already has done. However it has already fallen a lot. Invest at your own risk!

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