Quintain's gearing spikes as valuations plunge

London-listed real estate company Quintain has seen its gearing ratio spiral from 60% to 90% in the six months to end-September due to a steep fall in valuations of its property portfolio. However, the company said it would continue to operate within its banking covenants.

Quintain reported on Thursday that its diluted net asset value dropped 37% to 439 pence per share for the six months to end-September. The company saw its pre-tax loss widen to £52 mln from £4 mln in the same period last year.

The group had gross property assets valued at £1.3 bn at 30 September 2008, with the regeneration business constituting 59% of the group by value, the Investment portfolio 12% and fund management 29%. The valuations of Quintain's directly held properties fell 20% to £869 mln. The situation at its major regeneration schemes at Greenwich and Wembley was worse, with a drop of 30% since last year.

Chairman John Plender said: 'These are the most difficult conditions the company and many of its peers have faced, and the impact is clearly seen in yields moving out in the wider market, which is in turn reflected by the marked increase of the discount factor applied by the valuers to our schemes at Wembley and Greenwich.'

'Whilst we expect to see further pressure on valuations, the board is committed to taking decisive action to protect and enhance its financial position,' he said.

Helical Bar, a UK listed property developer and investor, was markedly upbeat as it reported its results for the six months to end-September in stark contrast to the gloom at peers such as Quintain.

Acknowledging the difficult market conditions, chairman Giles Weaver said: 'in such torrid market conditions we expect to see buying opportunities that arise only once or twice in a property career. We have built up our own cash resources and agreed joint venture arrangements with well capitalised partners who are eager to invest alongside us where and when we find compelling value.'

Helical made a pre-tax profit of £12.7 mln, up from £7.3 mln. Its diluted EPRA net assets per share came to 33 pence, compared to 352 pence in the previous six-month period. Helical maintained its interim dividend at 1.75 pence per share and the Diluted EPRA earnings per share of 8.5 pence, compared to 9.7 pence in 2007.

Unlike Quintain, Helical adhered to its 'long-held practice' of not undertaking a revaluation of its investment portfolio, or re-assess the surplus on its development and trading stock at the half year.