| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 2.46 | -30 |
| Graham Formula | 0.87 | -75 |
Circle Property Plc (LSE: CRC.L) is a high-performing UK real estate investment company specializing in regional office properties with active management potential. Headquartered in Jersey, the company has delivered an impressive 87% NAV growth since its 2016 IPO, outperforming many peers in the UK real estate sector. Circle's strategy focuses on acquiring underperforming or undervalued office assets in supply-constrained regional UK cities, where it implements value-add strategies such as refurbishments, lease renegotiations, and redevelopment. Unlike traditional REITs, Circle maintains flexibility to recycle capital from asset sales into new opportunities, targeting NAV growth rather than just yield. As of September 2019, its £135.6 million portfolio across 15 properties showed significant reversionary potential, with estimated rental values (£10.9 million) substantially exceeding contracted rents (£8.2 million). This hands-on approach to regional UK office assets positions Circle uniquely in the commercial real estate market.
Circle Property presents an attractive proposition for investors seeking exposure to UK regional office markets with active value creation strategies. The company's strong historical NAV growth (87% since IPO) and portfolio reversionary potential suggest continued upside, while its non-REIT structure provides capital recycling flexibility. However, risks include exposure to UK regional office market dynamics post-pandemic, with potential headwinds from hybrid work trends. The company's relatively small market cap (£10.2 million) may limit liquidity, and its focus on value-add strategies carries higher execution risk than core real estate investments. The 0.31 beta indicates lower volatility than the broader market, potentially appealing to risk-conscious investors. Dividend yield appears modest (0.07p per share), suggesting the investment case rests primarily on capital appreciation rather than income generation.
Circle Property differentiates itself through its specialized focus on value-add opportunities in UK regional office markets, a niche underserved by larger REITs. Its competitive advantage stems from: 1) Local market expertise in identifying supply-constrained regional cities, 2) Active asset management capabilities to extract value from underperforming properties, and 3) Capital structure flexibility as a non-REIT. This allows Circle to pursue higher-risk, higher-reward strategies than yield-focused REITs. The company's small scale enables agility in acquiring smaller lots that larger players might overlook. However, this same small size limits access to institutional-grade financing and diversification. Circle's hands-on approach contrasts with passive landlords but requires strong local execution capabilities. Post-pandemic, its regional focus may prove advantageous as secondary cities see relative resilience versus London, though the broader office sector faces structural challenges. The company's NAV growth focus aligns it more with private equity-style real estate investors than traditional listed property companies.