Public Service Properties Investments - 74.5p
Those who believe that the property sector is now on the way up should take a look at Public Service Properties Investments, an AIM-listed company which released interim results for the six months ended June 30, 2009 on September 29.
The company owns a portfolio of care home properties predominantly in the UK but also in Germany, Switzerland and the US.
The main features which could drive the price higher are the relatively high net asset value and the solid yield which the shares provide.
In terms of assets, the net asset value has held up remarkably well under current conditions and stood at 153.1p as at June 30.
The adjusted net asset value per share was 193.7p at this time. Clearly these valuations are way above the current share price and although that can be said of many property companies at the moment, care homes should be a relatively safe investment.
However, it is important to remember that Public Service Properties Investments does have a considerable level of debt and there is an element of risk with all shares.
The interim dividend was held at 2p per share, which will be paid on November 13 to those on the register on October 9.
Total dividends last year were 6p and with prospective earnings covering that payout comfortably, there is a good expectation that the dividend can be maintained. At 74.5p this translates into a yield of over 8per cent and with interest rates at all-time lows that represents a very good return.
In summary, Public Service Properties Investments is certainly a share to watch. The fact that the shares were marked ex-dividend on October 7 may mean that there is some weakness in the near term and that could create an attractive buying opportunity.
In terms of the broader market we continue to believe that it is better to take a cautious approach. The three months to the end of September saw the FTSE 100 index rise by 20.8 per cent, the best quarterly performance ever by the blue chip index.
This does seem at odds with the economic climate, with many businesses and individuals struggling to cope with the current downturn.
Although more upbeat data is starting to feed through, there are very real fears that further pain could be felt and some share prices are looking decidedly toppy once again.
WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek professional advice as to the suitability of the investments.