Daejan Holdings is a £900m UK listed real estate investor that is majority controlled by the Freshwater family. The group invests in the UK and the US and has 52% of its asset base in residential property. A policy of low gearing has allowed Daejan to withstand downturns and outperform the UK real estate sector.In the Industry Classification Benchmarks (ICB) the real estate sector is listed as part of the financial services industry. Banks and real estate groups have a lot in common with both being cyclical sectors that deploy high levels of debt.In a downturn this can be a deadly combination with many banks failing in the financial crisis. Real estate firms also saw weakness with the UK’s two largest groups – Land Securities and British Land – undertaking rights issues in 2009.Land Securities rides the booms and bustsA recession reduces the valuation of real estate and sees lenders become more conservative on credit terms. This can bankrupt some of the weaker real estate groups and makes it a difficult to invest in real estate groups.Most of the large real estate groups firms are focused on mature, income producing assets. The…
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