Belvoir Group specializes in rental properties, with a focus on the Midlands and the North.
Founded in the 1990s and listed on AIM in 2012, the company runs hundreds of estate and letting agencies, managing homes on behalf of landlords and tenants.
The group’s profits have risen steadily for 26 years and chief executive Dorian Gonsalves is determined to maintain and surpass that performance.
At first, Belvoir focused exclusively on rental properties. In recent years, sales and mortgage advice has been added to the workforce. This business expansion helps make Belvoir more resilient to economic ebbs and flows. When sales are low, rents come under fire. When applications for new mortgages decline, demand for remortgage advice tends to increase.
The company also benefits from operating a franchise model, with 240 franchisees managing 335 offices across the country. Each agent acts as a mini-business owner and transfers a proportion of their turnover to Belvoir in exchange for support in areas such as marketing, regulation, compliance, training and IT.
Wait: Belvoir Group specializes in rental properties, with a focus on the Midlands and the North.
The approach works. Franchisees can focus on building their businesses while Belvoir provides the administrative backbone that helps them succeed. Franchisees also tend to be entrepreneurial, as their rewards are directly related to the amount of business they generate.
Belvoir adopts a similar strategy on the financial side, with more than 300 self-employed advisers operating through the Mortgage Advice Bureau, a network that offers independent guidance on mortgages and home-related insurance.
A combination of different divisions and a judicious acquisition strategy have helped Belvoir weather some of the toughest economic conditions in decades. Gonsalves even improved the group’s dividend policy in provisional figures in September, with a 25 per cent increase in the semi-annual payout to 5 pence per share.
Brokers expect a full-year dividend of 11p, rising to 11.5p next year and 12p in 2025. Profits of £10.1m are forecast for 2023, up 13 per cent from £11.4 million over the next two years.
Growth should come not only from an improving economic environment but also from greater collaboration between real estate agents, estate agents and mortgage advisors. Most of the group’s financial services experts look for clients independently of their colleagues, but Gonsalves is working on a computer tool that should encourage cross-selling between divisions.
Midas Verdict: Midas recommended Belvoir in 2016, when shares cost £1.21. Today, the shares cost £2.40. The increase is notable compared to its peers, but the price is still down from the highs of two years ago. That should change, with brokers targeting £3.75 within 12 months.
Demand for rental properties is at a record level, while sales are holding up better than many expected. Gonsalves also has a firm hand on the helm, having spent his entire career in the market, including a five-year stint as director of the Property Ombudsman. He keeps these shares.
Traded in: AIM Heart: BLV Contact: belvoirgroup.com or 01476 584 900
