About LSL Property Services (from its Press Release)
LSL is one of the largest providers of services to mortgage intermediaries and mortgage and protection advice to estate agency customers, completing around GBP41bn of mortgages in 2021. It represents around 10% of the total purchase and re-mortgage market with around 2,900 financial advisers. PRIMIS was named Best Network by Money Marketing in their 2021 awards and Best Network, 300+ appointed representatives at the 2022 Mortgage Strategy Awards.
LSL is one of the UK’s largest providers of surveying and valuation services, supplying seven out of the ten largest lenders in the UK, employing around 500 operational surveyors, and performing over 500,000 valuations and surveys per annum for key lender clients. It was named Best Surveying Firm at the 2022 Mortgage Finance Gazette Awards and Best Surveyor at the 2022 Equity Release Awards with Mortgage Solutions.
LSL also operates a network of 225 owned and 128 franchised estate agency branches.
“As reported in our Interim Results, LSL traded strongly in the first half of the year, with our Surveying & Valuation and Financial Services businesses achieving record revenues. The Estate Agency Division retained the substantial market share gains made in 2021, in doing so building a strong sales pipeline as significant profits were delayed by the continuing slow speed of exchanges across the market. This meant that the Group entered the second half of 2022 well placed to deliver a strong H2 profit performance, ahead of the equivalent period in 2021.
“Since that time, market conditions have been more challenging than previously expected, with the mortgage and housing markets being disrupted by political uncertainty and sharply increasing interest rates. Across the market, this has given rise to a reduction in mortgage activity and new house sales, and an increase in fall-throughs of previously agreed sales.
“This challenging background means that there is a wider range of potential outcomes for the full year than previously expected.
“I am pleased to confirm that LSL’s performance has remained resilient, and we are confident that Underlying Group Operating Profit in the second half of 2022 will at least be broadly in line with the second half of 2021, with the possibility of a stronger performance depending on the volume of valuation instructions received from lenders. This includes additional costs incurred due to discretionary payments to over 2,000 colleagues to help alleviate the impact of significant increases in living costs. Around GBP0.6m of these costs will be reflected in 2022, with a further GBP0.8m to be paid in 2023 to cover the winter months.”
Trading update 25 November 2022
I have owned LSL before. It provides ancillary services to buying a house. Whilst the Housing Market is in a downturn, I do feel that falls are overdone and LSL is in a good position to capitalise as the Market Recovers, without tying up capital in actually building the properties. As long as properties are being bought and sold to some extent there will be a demand for its services – and it is one of the bigger players. With a yield of 4% or so, it’s one to tuck away.
About Belvoir Group (from its Press Release)
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise Group with 463 offices across seven brands specialising in residential lettings, property management, residential sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, the Group manages 72,900 properties and reported record revenues of GBP29.6m in 2021 marking Belvoir’s 25(th) year of unbroken profit growth.
Like LSL, I have owned this before. It is strongly into its franchising model, which spreads risks and also incentivises local owners.
Latest pre-close update was very positive:
Group revenue increased to a record level, up 13% to GBP33.5m* (2021: GBP29.6m). The housing sector performed better in 2022 than many commentators had forecast at the start of the year, with UK residential sales transactions down 15% on 2021, but around 6% ahead of pre-pandemic levels, and rents on new tenancies increasing by 10.8% during the year. Consequently, Belvoir’s financial performance for the year, including profit before tax, is anticipated to be slightly ahead of managements’ expectations
A sustainable 5% dividend, PE of 8 and net cash works for me.
Crest Nicholson – top-up
Crest Nicholson builds homes. My existing holding was bought June 2018, since when it has lost 40% of its value – D’Oh, although this has been mitigated by dividends, reducing that to a 25% loss. Still painful, but shows the power of Dividends over time. As per my doubling up methodology I have finally got round to averaging down. This makes the overall loss figures now 19% / 13%. On a 7% yield, that will do.