Mansion Group looks to Far East for fund investors

STUDENT property firm Mansion Group is back in profit after refocusing on investment advisory services, and plans to expand its offering to Asia, by setting up a US dollar share class.

The Manchester-based group acquires, refurbishes and asset manage student properties. But the credit crunch meant it was forced to change the focus of its activities from targeting rich individual investors through buy to let marketplace to offering properties to investors through student property funds.

The new funding structure was implemented in December 2008, when the group was appointed as property advisor and manager to Guernsey-based PSG’s Mansion Student Accommodation Fund (MSAF), which listed on the Channel Island Stock Exchange in December 2009.

The company is now looking at three properties  in London, each with around 90 beds, for the introduction of a dollar class fund in the next six months, which it says will attract investors from the Far East.

Chief executive Shankar Ramanathan told TheBusinessDesk:  “Now we have got that [MSAF] fund up and running we see ourselves as becoming property advisers to other funding structures, such as a US dollar class.

“It probably would still be with the same PSG fund, but would just be trading in dollars, as they don’t want to have to convert.”

Newly filed accounts show the group fell into a pre-tax loss of £4.3m for the year to the end of April 2009, from profit of £131,000 a year earlier. This was on a 60% increase in turnover to £16.7m.

In his report Mr Ramanathan said: “One must take into account two main factors which are the change in share holding resulting in exceptional item transaction of £1.9m and secondly the fact that Mansion did not trade for a period of eight months whilst it established the new sale channel.

“Despite having no new income for an eight month period the company was still able to cover its overheads through the reserves it had built up from its formation.”

Mansion acquired Beechwood House and Weston Court, both in Fallowfield, Manchester. Of the 196 beds across the two properties, 177 were sold to the MSAF investment fund.

The company, which employs 25 staff, has since changed its year end to December.

It said a “more realistic” measure of its performance to date was that it made an unaudited pre-tax profit of between £2.2m and £2.3m on a turnover of £32m during the eight months of trading to the end of 2009.

During this period Mansion acquired three properties in Bristol, Newcastle and Liverpool (66 Mount Pleasant), with a total of 763 beds, all of which have been sold to the MSAF fund.

In the two months since the company’s 2009 year end, the company has not acquired any sites, but is about to complete on a 38-bed acquisition in Oxford.

“Oxford is a strategic town and once we have acquired these properties we can often change them and add more beds,” said Mr Ramanathan.

Mr Ramanathan added that the company currently had a cash deficit (shown in the April 2009 accounts as £3.47m) because it was reinvesting in acquisitions but that towards the end of 2010 it would move to a cash positive position.