In a recent engaging conversation with Zak Mir, CEO of Roadside Real Estate, Charles Dixon shared valuable insights ahead of the company’s Annual General Meeting scheduled for mid-June. This interview provides a comprehensive look into Roadside Real Estate’s strategic direction, recent financial achievements, and plans to reward shareholders, including a significant share buyback proposal.
Roadside Real Estate’s Impressive Share Performance and Share Buyback Plan
Last year marked a remarkable milestone for Roadside Real Estate, with its shares appreciating more than threefold. This achievement not only reflects the company’s robust business model but also the strategic decisions made by its leadership. Charles Dixon expressed his satisfaction with this performance and highlighted the potential for further share price appreciation.
Central to the company’s plans is a proposed share buyback, which was subtly included in the recent AGM notice. This buyback allows the company to repurchase up to 10% of its ordinary share capital, a move that has already garnered shareholder support. The buyback strategy is driven by the proceeds from the company’s divestment activities, particularly from its stake in Cambridge Sleep Sciences (CSS).
“We wanted to be able to reward our shareholders but also provide liquidity to them,” Charles explained. This buyback not only signals confidence in the company’s future prospects but also offers shareholders a direct benefit, enhancing shareholder value without dilution.
The Dual Strategy: Roadside Developments and Cambridge Sleep Sciences
Roadside Real Estate operates a unique two-pronged business strategy that has evolved over the years. The company’s core focus remains on roadside property developments, which align with its name and long-term vision. However, it also holds a significant stake in Cambridge Sleep Sciences, a business currently valued at around £48 million on the company’s balance sheet.
Charles described this dual approach as a “two-barrel strategy,” with each component playing a vital role. The roadside developments continue to grow with several acquisitions lined up, while the CSS investment has been a source of substantial value creation. The company is in the process of divesting its remaining interest in CSS, aiming to convert this stake into cash over the coming months.
“We’re now really focusing on one barrel as the second CSS barrel has turned into cash,” Charles said, highlighting a shift towards concentrating resources on their core roadside real estate business.
This focus on transforming CSS holdings into cash is a strategic move that allows Roadside Real Estate to invest in high-growth areas without diluting existing shareholders. The company has benefited from the tax-efficient nature of holding shares in CSS, avoiding tax on gains while unlocking liquidity.
Could These Have Been Two Separate Companies?
Interestingly, the question arose whether the two parts of the business—roadside developments and CSS—could have operated as separate entities. Charles acknowledged that this was considered in the past but ultimately deemed unnecessary. The synergy between the two has worked well, especially with the ability to convert CSS shares into cash efficiently.
Focus on Operational Real Estate: Creating More Value
Looking ahead, Roadside Real Estate plans to deepen its commitment to operational real estate. Unlike being a passive landlord, the company aims to be an “operational landlord,” actively managing its properties to drive better returns and create more value for shareholders.
Charles highlighted that the company’s recent full-year results had already touched on this operational focus, which has become a significant area of attention over the past few months. This strategic shift is expected to deliver superior total returns compared to traditional real estate investment models.
Moreover, new acquisitions in the operational real estate sector are on the horizon, reinforcing the company’s growth trajectory. The share buyback program, anticipated to take place in the second half of the year, will complement these initiatives by providing liquidity and supporting share price stability.
The Impact of Government Policy and Economic Environment
The interview also touched on the broader economic and political landscape, particularly the change of government in the UK over the past year. Charles reflected on how these changes might impact Roadside Real Estate’s business operations and growth prospects.
While acknowledging that the government’s strong focus on achieving net zero emissions could be a positive for Roadside Real Estate, given the company’s alignment with sustainability goals, Charles also expressed some reservations about corporate tax policies.
“The corporation tax rate is frustrating because it disincentivizes companies to invest,” he noted. “The increase in employer’s National Insurance contributions is also frustrating from a corporate perspective, but since we don’t have many employees, it hasn’t impacted us much.”
Despite these challenges, Charles emphasized the desire of business owners and managers across the country to see economic growth. However, he cautioned that some current policies might be anti-growth, potentially hindering long-term business expansion.
Summary: A Company Poised for Growth and Shareholder Value
Roadside Real Estate is at an exciting juncture, combining a proven track record of share price appreciation with a clear strategy to continue growth and reward shareholders. The upcoming AGM and associated share buyback program reflect management’s confidence in the company’s prospects and commitment to shareholder returns.
The dual strategy of investing in roadside developments while managing and divesting the stake in Cambridge Sleep Sciences has allowed the company to build a strong financial position. Moving forward, the focus on operational real estate is expected to unlock further value and improve returns.
While external factors such as government policy and taxation present challenges, Roadside Real Estate’s leadership remains optimistic about the company’s ability to navigate these issues and capitalize on growth opportunities.
Key Takeaways for Investors and Stakeholders
- Roadside Real Estate’s shares have tripled last year, signaling strong performance.
- The company plans a share buyback of up to 10% of ordinary share capital, providing liquidity and rewarding shareholders.
- Roadside operates a two-pronged strategy: growing roadside developments and managing the divestment of Cambridge Sleep Sciences.
- Converting CSS shares to cash enables reinvestment into high-growth areas without diluting shareholders.
- Focus on operational real estate aims to generate better returns than traditional landlord models.
- Government policies on net zero emissions align with the company’s sustainability focus, though tax policies present some challenges.
Final Thoughts
Roadside Real Estate’s journey, as shared by CEO Charles Dixon, provides a compelling example of strategic agility and shareholder-centric management. By balancing investments, divestments, and operational improvements, the company is well-positioned to continue delivering value in a changing economic landscape.
For investors, the upcoming share buyback and continued growth in operational real estate signal exciting prospects. Meanwhile, the company’s ability to navigate political and economic challenges will be essential in sustaining its upward trajectory.
As Roadside Real Estate moves forward, its clear focus on rewarding shareholders and driving operational excellence will likely remain the cornerstone of its success.
