Time to dock at Mersey

PORT and docks businesses have tended to be solid rather than exciting. World trade is growing fast, but trade in steel, timber and coal - which come by sea - grows less quickly. Long-term port traffic has grown at 3% a year, only half as fast as air traffic.

But port owners are using their riverside acreage to develop modern properties. Associated British Ports in South Wales, Forth Ports in Edinburgh and Clydeport in Glasgow have seized the chance to exploit their assets.

So has The Mersey Docks and Harbour Company which owns the ports of Liverpool, Heysham in Lancashire and Medway Ports (Sheerness and Chatham) in Kent.

The glory days for Liverpool's port were in the 19th century when it serviced the Industrial Revolution. These days it runs Irish Sea ferries, container traffic to Northern Europe and North America and grain from the Mediterranean.

Mersey's profits have been running at about £55m with cash flow topping £70m, easily securing a dividend yield of 3.5%.

The real attraction is the property. Mersey owns 2,750 acres - in its books at £210,000 an acre. Most, but not all, is needed for its port operations.

It has outline planning permission to develop 55 acres of Liverpool's central docks. The scheme includes 2,000 houses and apartments, retail space, a marina with water sports facilities and probably a hotel.

These assets would be priceless in London. Rents in Liverpool are about a fifth of those in London's West End. Plans to control access to new developments, to cut down crime and vandalism, have been controversial.

Liverpool is Europe's City of Culture for 2008, which should boost the city and its property.

Some see an eventual merger with Forth Ports, which is a similar size, to create a rival to the £1.4bn market leader AB Ports.

In the meantime, the quality of Mersey is its property assets. They are a solid underpinning for the shares at 670p.