In an encouraging sign that trading continues to be positive at UK builders merchant Lords Group (LORD) , the company said today that it was buying the freehold at one of its existing leased facilities near Heathrow for £6.26m.

The 1.52 acre site is prime industrial real estate, from where its George Lines Civils & Landscaping Merchants business has been operating for more than 40 years. £2.2m of the consideration has already been paid with the balance due prior to 5 July 2024, when full title will be transferred. In the meantime Lords will continue to lease the property, with any rental payments deducted from the final bill.
 
CEO Shanker Patel  commented: "We are pleased to have been able to secure this highly sought-after site which has exceptional logistic and trading benefits for the George Lines Brand."

Lord's valuation remains compelling - at 79p the shares trade on 2023 multiples of 7.5x EV/EBIT and a PE of 9.1x, alongside a 2.4% dividend yield. 
 
What’s more, 80% of the group's sales come from the economically more resilient RMI/professional markets, where millions of UK properties still need modernisation. Lord is also widening its energy efficiency and decarbonisation product range - such as air source heat pumps and electric boilers - in order to help families offset the cost of living crisis.
 
House broker Berenberg has a 120p a share target price, higher than my fair value estimate of 112p, and this offering decent potential upside.