Argent heads for market after rise in asset value: Midlands property developer likely to be valued at about pounds 150m

THE DEVELOPERS of an ambitious 17-acre property scheme in the centre of Birmingham are planning a stock market flotation next month on the back of a strong rise in net asset value through the recession.

Argent, founded 12 years ago by Peter and Michael Freeman, sons of the City law firm owner DJ Freeman, will be worth about pounds 150m. It owns a mixed portfolio valued at pounds 244m, has debts of pounds 120m and plans to raise pounds 25m of new money.

Besides its well-let portfolio of investment properties, Argent's biggest attraction is likely to be Brindleyplace, a mixed office, retail and residential development in the middle of Birmingham which is to be built over the next five years.

The site, next to the city's new international convention centre, has consent for 1.1 million sq ft of offices, 330,000 sq ft of retail leisure space, 120 homes and parking for 2,600 cars. It was acquired from the receivers of Godfrey Bradman's collapsed developer Rosehaugh in June 1993 for pounds 3m but, after renegotiating the site's planning permission to include a higher proportion of offices, the Freemans had it revalued recently at pounds 26.6m.

The cost to Argent of the Brindleyplace site, which has a canal-side position in Birmingham's 'West End' and will offer high- quality offices surrounding landscaped squares, was sharply reduced to just pounds 1m when the company sold part of it to Tony Pidgeley's Berkeley Group for pounds 2m to build the residential element of the scheme.

Argent is already talking to three occupiers, all of whom are looking for more than 100,000 sq ft of office space. The company says there is only 40,000 sq ft of available new space in the city compared with average annual take-up of 400,000.

The rest of the portfolio, 17 buildings valued by Hillier Parker and Weatherall, Green & Smith at more than pounds 200m, cost pounds 141m and provides rental income of pounds 13.9m.

Because of the timing of the acquisitions, nine of the 17 are leased at rents below current market level. An increase to market rents would add pounds 1m a year to income.

More than a third of the portfolio is represented by out-of-town shopping centres, the sector of the market where rents are growing fastest, and 85 per cent of the properties have leases that do not expire for at least 20 years. Net assets per share have grown from 100p to 275p over the past two years.

Pricing of the offer is expected on 26 May, with first dealings in the shares on 8 June.