Mountview AGM

Mountview Estates had its AGM in London on Wednesday. Those of you that have read my stuff before know that I feel this is a sensibly run company, that buys reversionary tenancies which are then held on the balance sheet under 'trading assets' at the LOWER of cost and net realisable value until vacant possession is taken and the property is sold. For more on the accounting read here:

http://www.stockopedia.com/content/mountview-not-as-undervalued-as-it-once-was-but-still-interesting-101753/

http://www.stockopedia.com/content/mountview-estates-technical-index-selling-creates-buying-opportunity-134774/

Anyway what more did I learn?

The CEO, DM Sinclair is the son of the founder and the last family executive on the board. A third generation member Dr Williams is a non Exec, but he is not involved in the day to day running of the business. I believe Mr Sinclair is over 70 years old. However the Chairman did remind me that his father was involved in the day to day running of the business until he was 94. So I don't get the impression the for sale sign is up just yet.

The last reversionary tenancies were created in 1989, so the business does have an issue replacing properties it sells as there are just fewer of them around. Typically MTVW will pay 75% of vacant possession (VP) for reversionary tenancies. This has crept up over time and I expect it to do so in the future as these properties can't be handed on to the offspring of the tenants. So as each year goes by, on average it will be closer until the tenant dies / moves out, therefore MTVW can afford to pay a greater percentage of VP. The 2014 external valuation was based on 75% of VP.

MTVW is unlikely to diversify into adjacent areas like Grainger has done into Private Rented Sector.

There may be liquidity events crystallised by family trusts needing to pay CGT as shares are passed between descendents. This may cause blocks of shares to be placed or may presage a sale of the whole company (both my own opinions).

Overall this is a sensibly run company, with low levels of gearing and a family shareholding that means the family won't mortgage the future of the company for temporary gains today. Overall the shares are trading at a discount to tangible NAV if one uses…

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