Ewart recorded a pre-tax profit of £2.6 million in the 14month period to June 30th, 1997, which annualised comes to £2.2 million. The deal with Argos will boost that by 12 per cent which should provide the Belfast company with useful fodder to reiterate its rejection of the Dunloe offer.

Ewart, the publicly quoted Belfast property company, is not sitting on its laurels, following its rejection of the bid from Dublin firm, Dunloe House. This week it made a rather innocuous statement that it had leased its Ross's Court property in Belfast to Argos Distributors. But that statement was positive for two reasons. First, it was made just before Dunloe circulated the Ewart shareholders with the official offer document. Tactically the move put a feather in Ewart's hat.

Second, it will boost its asset base. The figures speak for themselves. The property had been a dud with 30 tenancies, bad debts and not fully occupied. Ewart got vacant possession following the payment of £300,000. That together with renovation costs of £1 million put the value of the property at £2.9 million.

The Argos superstore, covering 55,000 sq ft (it is scheduled for opening before Christmas), will pay an initial annual rent of £350,000 rising to £400,000 in year five. That places it on a yield of about 12.9 per cent. With interest rates falling, Ewart could, if it wanted to, sell the property at a nice profit. A yield of around 7.5 per cent could be achieved from an institutional investor. That would imply a value of some £5 million on the Belfast property. Ewart is unlikely to realise that profit in the short term. But it could legitimately have Ross's Court revalued to around £5 million. That would boost its net asset value per share by around 6p, bringing the net asset backing per share up to 72p from 66p. So already the net asset value per share is higher than the Dunloe cash alternative of 67p. And that is without any further revaluations. Apart from the enhancement of the net assets, Ewart will also boost its rental income, and earnings per share. The servicing costs of the extra £1 million being put up by Ewart would amount to some £80,000. That would reduce the initial annual rental from Argos to £270,000. Ewart recorded a pre-tax profit of £2.6 million in the 14month period to June 30th, 1997, which annualised comes to £2.2 million. The deal with Argos will boost that by 12 per cent which should provide the Belfast company with useful fodder to reiterate its rejection of the Dunloe offer.