Douglas Conn, managing director of Stewart & Wight (LON:STE) believes a change in government policy must occur to help the high street recover.
Conn, who runs a portfolio of 19 shop leases in high streets all over England, said the current policy of not taxing internet companies while increasing business rates for retailers is nonsensical.
“It will make high streets die,” he told Proactive, “It is such a one-sided policy.”
Rumours this month were that fashion outlet New Look was planning to close up to 60 shops to slash its rent bill.
If that happens or another major retailer goes under, the government will have to act Conn believes or “We won’t have high streets”.
Conn, who has been running Stewart & Wight since 1988, admits he has to look harder to find good opportunities but still sees bright spots out there.
Even in a market that’s contracting you can still make money, he said.
“People still want to go shopping for the experience of going to the High St, having a coffee and to wander around the streets.”
But you have to be very selective where you take on a property, he adds.
Stewart & Wight was formed in 1888 and listed originally as a bakery and tea shop company in 1898 but has been a property investor since 1979.
Conn concedes it won’t see the growth in rents that it might have done in recent decades.
But that depth of experience and a network of connections has put S&W in good shape to navigate the current tricky environment.
You have to know your towns, he says, and the places where space is still in demand.
“As a small company, we can identify these and take advantage.
“We have connections with the retailers that have outlets all over the country and we can ask how they are doing in a particular high street.
“That way we get a feel what‘s going on in a particular town.”
Current tenants include household names Costa, Rymans, Clarks Shoes and Specsavers.
All of its properties are fully let.
At a share price of 525p, the shares trade at a substantial discount to net asset value of 728p.
The yield is a healthy 4.7% while the dividend has never been reduced in the 39 years since his family took control of the company
That valuation might look a bit mean but Conn admits freely that Stewart & Wight is not, nor will likely ever be, a racy stock.
“We are long-term investors steering a steady course” and in that skin it is very comfortable.