West Midlands property company A& J Mucklow has applied for planning permission for an ambitious redevelopment of its Bull Ring Trading Estate, fronting Digbeth High Street in Birmingham.
Mucklow, which developed the site as an industrial estate in the 1980s, now wants to replace that with 480 apartments together with 90,000 square feet of "retail and leisure" buildings along with 650 car parking spaces.
"The end value will be at least £180 million, but it is unlikely for some years," said Mucklow's chairman, Rupert Mucklow.
Meantime, the company is embarking on its first speculative development for some time. It is starting work this autumn on two industrial/warehouse units totalling 85,000 square feet next to the Star City centre in Birmingham.
"We have had the land for two years," Mr Mucklow said. "Over the last three months most of the empty buildings have been taken up. We are hoping we have got our timing right. It will be ready next summer."
Mucklow has also agreed to buy a 8.5-acre site close to junction six on the M5 at Worcester. The price is thought to be in the region of £5 million.
A 110,000 square- foot industrial building occupies part of the site, but there is also three acres of surplus development land.
For the past two years Mucklow has been selling its older industrial properties, in a market where the prices for older properties have almost caught up with those for modern premises.
Re-investing the proceeds has proved more difficult.
"We have always been counter-cyclical," Mr Mucklow said. "We are selling properties which in normal times we would be hard-pressed to sell.
"But the market was so hot there was no point in chasing after the deals that could be done."
Over the past two years, Mucklow's sales of investment properties have raised £79.5 million, involving a loss of £5.65 million a year in rent - equivalent to more than seven per cent. The proceeds earned much less on deposit with the bank.
So Mucklow spent £48.2 million to buy back and cancel most of its 11.5 per cent mortgage debenture with a nominal value of £33.6 million. Otherwise this would not have matured until 2014, costing £3.86 million a year in interest in the meantime.
The paper loss from this transaction entitled Mucklow to tax relief on the gains from the sale of investment properties - but, along with the absence of rents from properties sold, it also replaced its pretax profit with a £1.93 million loss for the year to June.
Paradoxically, the tax relief turned this into an after tax profit of £68,000.
At the end of June net asset value, not counting deferred tax, was 3p higher over the year at 377p. The balance sheet was three per cent geared, with borrowings down to £15.9 million from from £ 49 . 5 million and £10.6 million of cash in the bank, down from £34.5 million.
A 6.96p final dividend gives shareholders a 7.4 per cent increase for the year. The shares eased back 31/4p yesterday to 4083/4p, where they yield 3.1 per cent.