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TWST: Can we start with an introduction and a brief historical sketch of Warner Estate Holdings (London: WNER.L)?

Mr: Warner: The Company was originally formed over 100 years ago. It was a residential company, owning and renting houses, but has been moving to commercial since 1960s. Two years ago we disposed of our last residential assets to become a purely commercial investment property company. Over the last three years we have been moving from purely managing and looking after our own property investments, which are entirely in the UK, to also co-investing with large financial partners. In other words, we want to use our management skills to look after property for ourselves, and also form property funds with others investors and look after those too. We are managing currently just over £600 million worth of property in the UK, over £200 million of that in a recently formed joint venture with the Bank of Scotland called The Agora Shopping Centre Fund. We anticipate continuing this strategy, where we form funds with other investors and thereby leverage up both our capital and of course the property management function.

TWST: In terms of tracking your progress and seeing how successful you are, what specific milestones and/or metrics should we keep an eye on?

Mr: Warner: We like to focus on total return, i.e. we are not just going to try and improve the asset value or just improve the revenue stream, but both. We have got a dividend record that can’t be beaten by many people – thirty-two years of unbroken increases. So we bring in income for our shareholders and the asset value has been steadily improving as well. If you are looking for security, the measure we use is recurring revenue profit; in other words strip-out the occasional gains from capital sales. The recurring revenue income from our tenants well covers the dividend and is on the increase year on year.

TWST: When you look ahead over the next couple of years, how would you describe the strategy that you are going to follow?

Mr: Warner: It is simply to roll out the concept again, either in the same sector in a different area, or another sector, depending what our research has shown offers the best opportunity for us, but certainly to raise the quantum of the property under management. As I said, we are managing a 600 million portfolio at the moment and the next obvious target with a nice ring to it is a billion. We aim to achieve that within a couple of years. Our partners in the Agora Fund, The Bank of Scotland, are happy with us to date, happy enough to support the expansion of the fund. And indeed, if it is another shopping center fund that follows on, there is a fair chance they would be the partners again.

TWST: When was the Agora fund launched?

Mr: Warner: We have been working on it for over the last 12 months, and it was launched in March.

TWST: Is there a trend towards more institutions looking to get a play in the property market through such partnerships?

Mr: Warner: Yes, for institutions it’s a chance for them to obtain exposure to different sectors of the property industry without having to take on the staff necessary to do so.

TWST: What are you hearing from the investment community at this juncture? Is your message essentially getting across or do you run into any concerns or misperceptions?

Mr: Warner: Our shareprice is at a 12 month high and probably one of the lower discounts in the sector. I don’t want to make myself a hostage to fortune, but at the moment the message is starting to get across. I think the market probably did have some misconceptions because we used to be a much quieter company. I am not saying we are noisy now, but we are active and seen to be making the best use of our assets through the purchases we are making. I think we are becoming known for making good use of the capital we have as well by leveraging it up.

TWST: What are the three of four compelling points about your company that you would highlight to potential long term investors?

Mr: Warner: Our objective is to exceed our industry benchmarks and to improve the market rating of our shares by delivering performance. I would like to think that we are succeeding on that score. Alongside that, our aim is to reduce our discount to the net asset value, which is a feature of property companies certainly in the UK, and overall to achieve value for our shareholders. I would stress the point of combining asset improvement with income improvement. So even when the asset improvement declines for reasons of market forces beyond our control, investors in Warner would continue to get their income.