ACE Liberty & Stone (ALSP ISD), an Aquis (ex NEX) growth market listed property trading company provided a trading update with a lot to recommend it in the current conditions. The company has been building a property portfolio rising to 88m year-end April 2019 up from 10m year-end April 2014. Recently ALSP raised £4.55m via warrant sales, which based on its LTV ratio will translate to around £10m of commercial property investment. ACE’s real estate investing delivers a yield of around 7%.
We estimate a dividend yield to fully diluted NAV 20E of 7.6%, which suggests a share price premium to NAV is justified particularly when combined with the growth and trading characteristics of ACE. 52% of the portfolio attracts rental income from government departments. For the March 2020 quarter 82% of rents have been collected and 750k deferred (not lost) to 2021. The share overhang has been further reduced since the 1H19/20 results (hence our lower value range). We expect cash funds to be used for further property investment. The overall strategy to grow the business remains in place and ACE has the resources to execute this strategy. The combined characteristics of ACE, in our view, make it an unusually interesting stock in the real estate investing market, particularly in the light of Covid-19, which tests its robust business model.