Buzz around this stock..definetly one to watch...any views would be appreciated...



COMPANIES UK: Net closes around Crest
By Lucy Smy
Financial Times; Feb 16, 2004

What is it that Crest Nicholson has that other housebuilders do not?

Discreetly tailing the group, like polite undercover detectives, are two investment companies.

Both are quietly buying up ever larger stakes and neither of them are clarifying their intentions toward the company or its other shareholders. For nearly six months, the otherwise expansive John Calcutt, chief executive, has affected a sanguine air about the stake being built by Heron International, the commercial property company run by Gerald Ronson.

Mr Ronson first bought into Crest in August last year. He refused to say what had sparked his interest in the stock. But industry analysts and associates like to note that while his company is now better-known for its landmark office blocks and leisure parks, it started life as a housebuilder. Heron has managed to increase its stake to 12.5 per cent this month - all without talking to the company.

Until last month, Mr Calcutt's line was that Heron was an investor. But Mr Ronson was not on the list when it came to the post full-year results round of calls to leading shareholders. "These are unusual circumstances," Mr Calcutt said.

The circumstances got more unusual a week after the results when Heron upped its stake a little further and Jack Petchey, an old acquaintance from the commercial property world, also bought into the stock.

Mr Petchey's Trefick Investments now holds more than 3 per cent of Crest. But Mr Petchey, too, is a silent operator.

The difference between Mr Ronson and Mr Petchey, however, is that Mr Petchey has form - his actions speak quite loudly.

Heron has no track record in buying public companies. But Mr Petchey, through Trefick, has been instrumental in changing the ownership of a huge number of companies with a heavy emphasis on those with real estate or leisure assets.

The pressure has led Crest to turn Trappist. Are the two old commercial property boys acting in concert? Crest will not say if it is even trying to find out. Is the company trying to contact Mr Petchey? Again, silence.

So what is so alluring about Crest? It is a medium-sized housebuilder, based in the south of England, with an operating margin and a return on capital slightly below the sector average. But, crucially, it has the longest land bank of any of its peers.

Housebuilders measure landbank in years. It is a crude backward looking measure that divides the number of plots - with some form of planning permission - by the number of units that the housebuilder completed in the previous year.

The measure does not reflect whether the company plans on selling off some of its land or whether it is about to start increasing volume. But on this measure, Crest Nicholson has a land bank of 6.8 years against an average of 3.8 years.

The crucial factor when looking at a housebuilder's books is that, unlike their commercial property counterparts, housebuilders class land as working capital.

It is left in the books at the price it was bought.

This means that even after Heron's interest had pushed up Crest's share price to a near-30 per cent premium to its net asset value, it could still be a cheap buy for all that land.

Furthermore, the fit between commercial property companies and housebuilders has become closer. With planning regulations encouraging more mixed-use developments on brownfield land, which involve complicated building techniques, the traditional divide between commercial property developers and housebuilders is breaking down. Analysts are also mystified as to what the two are planning. Is it a strategic investment? A ploy to lure in a deep-pocketed industry bidder? Or is one helping the other?

The only parties who can talk are close to chortling with glee. One of Crest's big institutional shareholders is delighted that Mr Petchey has bought in. "He is not in there for the good of his health - he is there for the good of his wealth. This man is a facilitator."

After six months of silent stalking, the net may be beginning to close.

tried to find something bad , in past RNS recent ones only good positive, will hold
after results . s/p 474 8.3.18 BB