The UK property market continues to throw up some exciting growth opportunities, and the following FTSE 250 companies couldprovetemptingbuilding blocks for your portfolio.
Specialist regeneration and property developer U+I Group (LSE: UAI) manages a 6bn portfolio of mixed-use urban regeneration projectsin London, Manchester and Dublin. The residential property market may be wobbling at the moment but right now U+I = growth, itsshare price up 16% in three months. The company is bristling with potential.
It is acompany with asocial dimension too as it aimsto transformundervalued parts of towns and cities into thriving communities. Full-year results published in April showed fournew large-scale Public Private Partnershipwins, adding 1.5bn of gross development value to the companys portfolio.
Do your sums
The group was recently appointed to run the850m Mayfield Depot redevelopment in Manchester, building onearlier high-profile successes include Paddington Central, The Old Vinyl Factory and The Deptford Project in London. Mixed-use urban regeneration is the bigthingthese days and U+I has shown flair and imagination. But should you invest in it?
Investors cannot expect a smooth ride from a company valued at just 236m andworkingon a small number of large projects. Erratic revenues mean that earnings per share (EPS) fell a whopping 61% in the year to 28 February 2017, but are then forecast to rise 246%, before going on to slump37%.
However, there is plenty to tempt. Management reckons it is on track to deliver a 12% post-tax total annual return in the next three years. Todays valuation of 28 times earnings is forecast to plungeto just eight times, while the3.1% dividend yield is expected to hit 6.3%, then 8.2%, over the next couple of years. There is an opportunity here, if youthinks U+Is sums add up.
Residential developer and regeneration partnerCountryside Properties (LSE: CSP) aims to build homes of character and quality across the UK, and its recent share price performance has demonstrated both of those attributes, rising more than 40% in the last three months alone. This 1.47bn company is a much largerentity than U+I and should offer more stable returns, although with Nationwide showing house prices falling for three consecutive months, and housinganalysts warningof resurgent negative equity, nothing is certain.
Countrysidesrecent impressivehalf-year results showed housing completions up 31% to 1,437, and adjusted operating profits up 39% to 70.4m. Itspartnerships division, which works with local authorities and housing associations, posteda particularly strong performance, with adjusted operating profit up 66% to 38.5m. Managementsdecision to focus on the middle of the private housing market appears to be paying off as well, amid signs the top end is slowing fastestright now.
The company enters the second half of the yearwith 81 operational sites and a record private forward order book. City analysts are optimistic, pencilling-in rapid EPS growth of 66% in the year to 30 September, followed by another 27% next time. This should trim todays valuation of 20.21 times earnings to around 12.1, while the yield is expected to climb to 3.2% in the next couple of years. The only thing that can stop Countryside now is a house price crash.
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