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Dukemount Capital ("DKE"): 50 Year Agreement-to-Lease. Expected to receive £1m

Optiva Summary: 

  • Demonstrating execution and near term profitability: This is exciting news from DKE because they are a step closer to delivering profits of at least c.£1m from their first transaction. This demonstrates excellent execution from the management. It is important to highlight that the DKE could own the properties on a freehold basis thereby strengthening their balance sheet and underpinning the value of company.
  • Favourable market dynamics: There is an imbalance between demand and supply for long-dated income. The demand for long-dated income could be in the magnitude of £1.6 trillion, which is almost 5 times the current market value and the supply is expected to lag behind demand for long-dated income.  Therefore, we are confident that there will be institutional appetite for these type of properties because the majority continue to seek alternative inflation linked investments in a low yield environment.    
  • Valuation: DKE benefits from a flat expenditure structure and if we assume a conservative P/E multiple of 8x, with net earnings of £1m, it will imply a market value of at least £8m or 2.3p as the target price over the next 12 months

 

Dukemount Capital (DKE) - 50 Year Agreement-To-Lease Signed

28 September 2017

Dukemount Capital Plc

('Dukemount' or the 'Company')

50 Year Agreement-to-Lease

Dukemount Capital plc, the specialist developer and manager of real estate portfolios in the supported living and hotel sector announces that Larch Housing Association Limited (Larch) has signed an agreement-to-lease with a 50-year term on the development in North West England which we first announced in August. The lease, which is a fully repairing and insuring lease, is CPI linked on an annual basis over the 50-year period and commences at a rental income of £234,000.

The site is being developed for the fast-growing supported living sector and will include 17 apartments and 3,200 square feet of retail space which is also included in the Larch agreement. Dukemount subsidiary DKE (North West) Limited, purchased the site subject to planning permission which has since been granted thereby enhancing the value of the site and facilitating the funding of the building costs.  The Board will have the option of inviting institutions to make an offer for the property and will be targeting a sum in the region of £5 million plus. At this level Dukemount is expecting to receive a net return in excess of £1 million.

The Board will provide regular updates on the progress of this project over the coming months and intends announcing similar transactions as the year progresses.

Dukemount chairman Geoffrey Dart said; "The CPI linked rental income of £234,000 will be attractive to institutions looking to fill a gap in their long-dated income requirements and is the first of several projects being investigated at the moment."

Market Abuse Regulation (MAR) disclosure.

Certain statements in this announcement contain inside information for the purpose of Article 7 of EU Regulation 596/2014.

For further information, please contact:

Dukemount Capital Plc

Tel: +44 (0) 7874 762 821

Timothy Le Druillenec

 

 

 

Walbrook PR (Media and Investor Enquiries

Tel: +44 (0) 207 933 8780

Paul Cornelius / Gary Middleton

dukemountcapital@walbrookpr.com

 

 

Optiva Securities Ltd

Tel: +44 (0) 203 137 1906

Christian Dennis - Corporate Broker

 

Jeremy King - Corporate Broker

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