Russell expects to double profits at Alliance

PROPERTY Alliance Group maintained pre-tax profits of £3.3m in the year to June 30,2010, as the company’s turnover increased by 10% to £13.7m, according to newly-filed accounts.

The founder and chief executive of the Trafford-based developer, David Russell, also predicted that the firm will double pre-tax profits in its current financial year to £6m following a string of recent successes, including the development and sale of the former Sarah Tower site at Dale Street.

“We stick to what we do well,” said Russell. We make sure that our occupiers are happy. We’ve not lost any tenants and on the other side we keep making sure we’re in touch with the agents to make sure we know who’s moving and who’s looking for space.

“We’ve got two or three deals in the pipeline which could contribute significantly to our profits in the next year.”

The accounts show that Property Alliance Group’s net assets increased by £2.5m to £57m by the end of the period, with net debt also reducing from £154.5m to £140.7m.

Russell said that the firm had managed its portfolio well, with vacancies at completed space running at just 2.9%. He also said that the firm saw opportunities in advising more banks on realising greater profits from some of the distressed property assets sat on their books.

For instance, he said that the return achieved by Property Alliance Group for the bank involved in the Sarah Tower deal was “60% higher” than it had been looking at from a sale to other sources.

It bought the site subject to gaining planning consent for a new Premier Inn site which he said was being built with a “five-star design” due to its location. Once planning permission was granted, the scheme was forward-sold to the British Steel pension fund.

Russell said that plenty of other developers were interested in the site due to its location and few felt they could make it stack up. However, he added that they were all looking at the building as a residential development.

“This way, the bank, Premier Inn, the city council, the buyer and we are all happy. The Piccadilly Partnership is also happy as it puts cranes in the sky again.

“It’s about being clever and looking at things in a different light.”

Russell added that the Axis tower scheme in Manchester – a £17m, 18-storey office building which is a joint venture with Development Securities remained under review, but he was confident that the building would soon secure the happen required for construction to start as the amount of Grade A space in the city centre dwindles.

“I’m just not a spec guy,” he said. “They (Dev Secs) know it’s going to be a lovely building and I want to see it propertyas much as anyone else because I’m sick of reviewing it every quarter.”

However, he said that when the project started was not as important as its eventual success. “We’ll make a profit on it – it’s a great gateway site into the city.”

Russell has recently bolstered Property Alliance Group’s management team, bringing in the former head of proeprty finance at Deloitte, Robin Priest, as the group’s new chairman. His appointment follows the recent recruitment of ex-Tesco executive John Clarke  to lead the firm’s retail and leisure development side.