Quintain making progress on Wembley venture

10th Aug 2011 14:41

Recovery play Quintain Estates said the new financial year has started well with the company on its way to achieving the ambitious milestones it laid out in May.The London-focused property developer said that letting activity and negotiations continue in respect of its joint venture, the London Designer Outlet, in Wembley, north London.The group has secured leases for over 17% of the base rent and has a further 23% in negotiation. The intention is to start construction of this scheme towards the end of this year, with a projected opening date of late 2013.Plans to develop two residential plots at Pensinsula Quays in Greenwich, south London, are also progressing. Preparation work that will enable the rebuilding of the river wall as well as other infrastructure and ground works is expected to start soon.On the fund management side, the company said its healthcare portfolios are under pressure as a result of the government spending cuts but good progress has been made with two student accommodation developments within the iQ fund."Fund Management is ... making good progress, with the first phase of its science park and more student accommodation developments approaching completion," said chief executive, Adrian Wyatt.As for the company's financial targets, it is continuing with its efforts to achieve cash flow neutrality and to extend the debt maturity profile of the group. The company has now achieved extensions on £355m out of £400m target commitments.The company is working towards reducing voids across the business, and has successfully concluded a number of small lettings as well as rigorously controlling overheads.Peel Hunt, which rates the stock as speculative "buy", notes that the company is 63% composed of two very large-scale regeneration projects at Wembley and Greenwich. "The strictly theoretical DCF [discounted cash flow] valuation is calculated with potentially contentious assumptions and we expect the shares to reflect this by continuing to trade at a significant NAV [net asset value] discount," the broker said. "Nonetheless, the current 66% discount seems too large in our opinion and with continuing step-by-step progress we remain supporters of the stock," Peel Hunt concluded. The shares were up 2.75p at 46.5p in the afternoon session.--jh