Curtis Banks PLC (LON:CBP) is well known in the SIPPS market but might not immediately spring to mind as one of Britain’s largest landlords.
The self-invested pension (SIPP) administrator is the UK’s biggest commercial property business, says chief executive Will Self, with a portfolio of close to 6,500 properties.
Commercial property is a very attractive, tax advantageous proposition for high-net worths in later life says Self.
It is also one of the firm's strengths and a central plank of a growth strategy he is now rolling out.
A property management firm and a legal operation have been set up to help capture some of the activity undertaken across its network.
The sales team has also been strengthened to help drive sales of a new single SIPP product that has pulled together all its previous offerings.
Curtis Banks is not an adviser and it works just with financial advisers, not directly with the public.
That means it is not competing with giants such as Hargreaves Lansdown but instead, focuses on a much wealthier and more sophisticated customer base.
A typical client, for example, is in their late forties and has held down three significant jobs with different pensions from each, says Self.
In these circumstances, an adviser would usually recommend consolidation of the pensions into a self-invested scheme and that is where Curtis Banks steps in.
On average, pension pots are worth between £350,000-£500,000 and Curtis Banks charges a flat fee rather than a percentage of the value of the fund.
All types of investment
Self says the firm can handle any type of investment from the plain vanilla-listed funds and equities that make up a basic investment portfolio through to unlisted assets such as property, start-ups and more exotic opportunities.
There have been well-publicised failures of some backers of the more esoteric investments recently, but Self emphasises it is not the adviser, just the facilitator.
The adviser recommends how the portfolio is invested or else suggests a discretionary fund manager to allocate the money.
Investment in technology means the pension interface is now accessible on a smartphone and all computers 24/7.
Self is confident that this upgrade plus the product and sales enhancements will mean future organic growth is better than the 9% gross SIPP additions seen in 2018.
That rise took the number of pensions it handles to around 77,700 with £25bn assets under administration.
Consolidation to gather pace
Acquisitions to flex its strong financial position will add more to the pot.
“We have £15mln immediately available for deals” he says, but there is scope to borrow or go back to the market to raise funds if necessary.
“There are 130 SIPP providers and that gives a very clear agenda to consolidate.
“We will be at the forefront. We have made 12 acquisitions over ten years and will make more in the short to medium term.”
Curtis Banks gave a very clear statement on its intent when it increased the 2018 dividend by 28% to 8p.
Self says there is more to come on this front as well.
Dividend cover at the end of the year was around 2.2 times, but the policy is to reduce this down to 2x.
Underlying profits in 2018 rose by 13% to £12.1mln, but with its market value at £327mln currently (at 304p), the market clearly expects Self to deliver substantially better in the future.
Reflecting that, the shares have also been on a good run recently and have gained 20% since October.
Political uncertainty might throw a spanner or two in the works but Self is confident it can handle whatever comes.
There is a need for individuals to save for their retirement as final salary schemes disappear and reliance on the state falls, so whichever government is in power, there will be an increased requirement to save money for retirement.
“We have a flexible product for both the accumulation and de-cumulation periods of our customers lives.
“Our expertise in commercial property and other asset classes is head and shoulders above others, while advisers can be confident about recommending us given the robustness of our balance sheet and profit and loss account.
“For IFAs, that longevity of the business model is really important.”