London-based Shore Capital is pressing on with plans to create a mezzanine property fund despite suffering a jolt from falling revenue growth from its real estate businesses.
According to a report in the Financial Times, chief executive Howard Shore’s appetite for real estate has not diminished and the company is ploughing on with a new fund that will provide mezzanine financing to property investors.
Shore’s statement comes as it revealed a 29 percent decline in pre-tax profits last year. Pre-tax profit was £14.3 million (€18.2 million; $29 million) in the 12 months to December against £20.1 million the previous year.
Shore blamed the revaluation of its Dawnay Share Hotels portfolio and a sharp decline in the share price of its Puma Brandenburg German real estate fund for the reverse. Shares in the Puma fund lost a third of their value in the last six months of last year as a result of the market turmoil. The company also took a £3 million hit on its stake in Dawnay following a £29 million reduction in the valuation of the hotel portfolio.
“We have every reason to believe that the mark-to-markets on Dawnay and Brandenburg are overdone, not underdone, and don’t represent the true value of the underlying assets,” said Shore.
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