Belvoir Lettings exceeds Assisted Acquisitions target for 2018

The AIM-traded firm said that during 2018, franchisees completed on 26 transactions under the Belvoir Assisted Acquisitions programme, increasing the acquired annualised network revenue to £6.9m, which exceeded the £6.6m target - itself double the 2017 level as set by the board.

It said the acquisitions were expected to add more than £0.6m of annual recurring management service fees (MSF) - the main revenue stream for the group.

The progress also added more than 4,400 managed properties, increasing the portfolio by 7%, with the Belvoir Group now representing over 62,000 managed properties.

Belvoir said the Assisted Acquisitions programme had been embraced by all three networks within the Belvoir Group, with 11 taken up by the Belvoir network, 13 by Northwood and two by Newton Fallowell.

In comparison with 2017, the average size of the business acquired increased by 85% from £0.14m annual revenue in 2017 to £0.27m in 2018.

That reflected a contraction of the number of agents in the sector, Belvoir claimed - not only among smaller agents, but also apparently many larger independent agents, as the impact of the number of landlords selling their properties due to a less favourable tax regime and the increased regulation on lettings agents took effect.

Belvoir said it had supported many of its franchise owners to take advantage of those changes within the sector, through its “highly skilled” in-house acquisitions team, and by providing internal funding of up to 30% where required.

In 2018, the group contributed £0.66m, or approximately 9% of the total consideration, by means of a loan, while 17 of the deals were funded entirely by franchisees utilising their own cash reserves or sourcing funds from other loan providers.

“The Assisted Acquisitions programme, now in its sixth year, has gone from strength to strength and continues to grow,” said Belvoir Lettings chief executive officer Dorian Gonsalves.

“Since 2014 we have provided both commercial and financial support to 70 of our franchise owners, many of whom have doubled the size of their business overnight.”

Gonsalves said the company continued to witness consolidation within the sector - a trend which supported its 2018 prediction that there would be 20% fewer agents by the end of 2020.

“This is evidenced by our acquisition opportunities pipeline being far greater than in previous years.

“Our franchisees are professionally and financially equipped to take advantage of these opportunities and we currently have 83 franchise owners who are actively searching for a suitable match within their territory.

“Belvoir is here to support our franchisees' entrepreneurial growth ambitions, which will benefit the group and our shareholders alike.”

The company said a more detailed pre-close trading update for the year ended 31 December would be provided on 31 January.