Belvoir Lettings PLC (LON:BLV) shares rose on Thursday after the UK's largest property franchise group exceeded its 2018 target for assisted acquisitions by its franchisees.
The AIM-listed lettings agent said beefing up the assisted acquisitions programme is a core part of its growth strategy.
WATCH: Belvoir Lettings exceeds 2018 target for its assisted acquisitions programme
During 2018, franchisees completed on 26 transactions under the Belvoir-assisted acquisitions programme, increasing the acquired annualised network revenue to £6.9mln; the target for the year had been £6.6mln.
These acquisitions are expected to add in excess of £600,000 a year of recurring management service fees, which is the main revenue stream for the group. It also adds more than 4,400 managed properties, increasing the portfolio by 7%.
The Belvoir Group now represents over 62,000 managed properties.
Feeling blessed. Watching my client open the door to his new home after being street homeless for 4 years. I really do love my job ????❤????@p3warwickshire @ Big love to Belvoir Lettings for making it happen.
— Helen Chase (@HelenChaseP3) August 31, 2018
In comparison with 2017, the average size of the business acquired increased by 85% to £266,000 in 2018 from £144,000 annual revenue in 2017. This reflects a contraction of the number of agents in the sector not only among the smaller operators but also many of the 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 provides funding of up to 30% of the purchase price through its assisted acquisitions team. In 2018, the group contributed £660,000 in total towards purchases, representing around 9% on average of the purchase price.
CEO lauds franchise opportunities
“The Assisted Acquisitions programme, now in its sixth year, has gone from strength to strength and continues to grow. 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,” said Dorian Gonsalves, the chief executive officer of Belvoir Lettings.
“We continue to witness consolidation within the sector, a trend which supports our 2018 prediction that there will be 20% fewer agents by the end of 2020. This is evidenced by our acquisition opportunities pipeline being far greater than in previous years,” he added.
“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," Gonsalves concluded.
In afternoon trading, shares in Belvoir Lettings were up 1.1% at 92.50p.
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