Credit Analysis: ALRA PROPERTIES LIMITED

1. Credit Opinion: CONDITIONAL

Rationale: While the company presents a substantial net asset position of £3.1M and has demonstrated meaningful deleveraging since 2013, the critically depleted cash position (£4,425, down 98.7% from £339,548 in 2025) and heavy reliance on related party balances (£2.3M of debtors) present significant liquidity and concentration risks. The lack of P&L visibility—permitted under the small companies regime—makes it impossible to assess operational profitability or debt service coverage from income. Any credit facility would require robust security, likely director guarantees, and potentially charges over the related party receivables.

2. Financial Strength

Balance Sheet Summary (Year Ending 30 June 2026):

Key Observations:

• Gearing: Long-term debt of £2.5M against net assets of £3.1M gives a debt-to-equity ratio of approximately 80%. This is moderate but acceptable for a property company where asset backing exists.

• Asset Composition Concern: Current assets are heavily concentrated:

• Stocks (property): £3,299,639 (58.6% of total assets)
• Other Debtors (related party): £2,310,093 (41.0% of total assets)
• Cash: £4,425 (0.08% of total assets)

Over 99% of assets are illiquid—either tied up in property stock or owed by connected companies.

• Positive Trajectory: Net assets have grown from £433,658 (2013) to £3,118,534 (2026), representing significant value creation. Total liabilities have reduced from £5.8M to £2.5M over the same period, demonstrating sustained deleveraging.

• Stock Stagnation: Stocks remain unchanged at £3,299,639 between 2025 and 2026, suggesting either properties are held for rental income rather than sale, or there is limited development/sales activity.

3. Cash Flow Assessment

Liquidity Position — CRITICAL CONCERN:

Critical Findings:

• Cash Depletion: Cash has fallen from £339,548 to £4,425—a near-total depletion. This is the most alarming metric in this filing. With only £4,425 in cash, the company has virtually no liquidity buffer.

• Related Party Dependency: £2,310,093 (99.2% of debtor book) is owed by companies connected through common directorship. This concentration creates significant risk:

• No arm's-length assurance on collectibility
• Potential for inter-company cash extraction

• If related entities face distress, recovery may be compromised

• Debt Service Obligation: The £2.5M bank loan bears interest at LIBOR + margin + mandatory costs. At current rates, annual interest costs could be £125,000-£150,000+. With £4,425 in cash, even one quarter's interest payment would be challenging without drawing on related party receivables or generating rental income.

• Income Visibility: The P&L account has not been filed (permitted under Section 444, Companies Act 2006). We cannot assess rental income, management fees, or operating margins. The retained profit movement from £3,122,563 to £3,118,434 suggests a small loss of approximately £4,129 for the year—though this may include unrealised property valuations.

• Working Capital Quality: While net current assets appear strong at £5.6M, the quality is poor—comprised primarily of illiquid property stock and related party balances rather than trade debtors or readily realisable assets.

4. Monitoring Points

Immediate Concerns:

1. Cash Position: The £4,425 cash balance requires urgent explanation. What has driven the 98.7% decline? Is this temporary (timing of receipts) or structural? Request bank statements for the 3 months post year-end.

2. Related Party Receivables (£2,310,093): - Obtain details of the connected companies and their financial standing - Request repayment schedules and terms - Assess whether these are genuinely recoverable or represent permanent capital extraction - Consider whether cross-guarantees from these entities are available

3. Bank Loan Terms: - Confirm repayment schedule (interest-only vs. amortising) - Review covenant compliance status - Understand maturity date and refinancing risk - Verify security—what specific properties are charged?

4. Stock Realisation Strategy: - Understand whether the £3.3M stock represents rental properties generating income or development stock awaiting sale - Request property valuations or rental roll - Assess market conditions for the specific properties and locations

5. Profitability Verification: - Request management accounts or internal P&L for the latest period - Understand rental yield on property portfolio - Assess whether the business generates sufficient income to service debt

6. Director Conduct: Both directors (Mr Ira Sheldon Rapp and Mr Tim Robert Altschul Allan) should be checked against disqualification registers. Mr Allan holds 25-50% ownership jointly with Lucca Limited—understand the structure and Lucca Limited's financial position.

7. Interest Rate Exposure: With LIBOR-linked debt, assess sensitivity to further rate increases and whether hedging is in place.

Risk Summary: The fundamental credit concern is liquidity. The company is asset-rich but cash-poor, with a debtor book dominated by related party balances. While net assets provide theoretical coverage, the ability to meet near-term obligations depends entirely on related party repayments and/or property income generation, neither of which is evidenced in the filed accounts.