Mountview Estates

Mountview Estates sits in a phase of its trading cycle where the cost of the homes it sells is rising faster than the income from them: turnover fell by less than half a percent while cost of sales rose more than eleven percent, cutting gross profit by more than eight and a half percent.

Net finance costs fell by over twenty percent, partly because the company reduced purchases. The company will not make purchases that would struggle to yield a proper return.

The risk that could invalidate Mountview Estates' thesis is time: regulated tenancies yield rental returns below market value, so the high margin on sale arrives only when a tenancy ends, while the properties remain tenanted for many years. The in-house Property Management team manages them in the interim.

Net finance costs fell by over twenty percent, partly because the company reduced its purchases. The company will not make purchases that would struggle to make a proper return.

Mountview Estates pursues a discount-to-value trade rather than a yield play by buying tenanted residential properties below notional vacant possession value and selling them when vacant, an approach where regulated tenancies produce below-market rental returns but high sale margins and life tenancy stock carries nominal rental income, a greater purchase discount, and a higher margin on sale.

Turnover dipped by less than half a percent while cost of sales jumped more than eleven percent, shrinking gross profit by over eight and a half percent.