Monday, November 19, 2007

UK Commercial Real Estate / NAV

How old fashioned..... Discounts on NAV........ And when you read UK commercial property "Dizzying heights" it should be clear that the discount trend will continue for years to come

Wie altmodisch......Einen Abschlag auf den inneren Wert..... Wenn man sich diesen Lagebericht Commercial property "Dizzying heights" durchliest sollte klar sein das dieser Trand wohl noch für Jahre anhalten wird.

FT Mid-season stock clearance in the property sector
Phewee. A brief respite for property stocks on Monday, as the likes of British Land and Land Securities just about managed to hold steady in a rising market.

Update 11.30 - that didn’t last long. As the FTSE turned lower, so did the real estate companies with British Land losing almost 4.5 per cent, and Hammerson and Land Securities down almost 4 per cent.

The sector finished last week in a fashion to which it has become accustomed - with all the large property companies taking a battering amid concerns that the UK real estate market has turned and that portfolio valuations will inevitably need to be marked down in the coming months.

> You don´t nedd to be a genius to see that something didnt add up when they pushed the premium to 30 percent above the NAV....... But i assume common sense in the "City" or "Wall Street" was out of favour during the past few years....

> Ich denke man benötigt hier kein Studium um zu erkennen das gerade zu Jahresbeginn mit als der Aufschlag satte 30 % zum NAV lag etwas nicht ganz stimming gewesen ist.... Aber wie weit verbreitet scheint während der letzten Jahre der gesunde Menschenverstand reichlich aus der Mode gekommen zu sein.......

How things have changed since the start of the year. With the introduction in January of property’s great hope, the real estate investment trust, the stocks enjoyed a bull run and started the year trading above their net asset values. Since then though, as this chart from KPMG shows, it has only been one way.

Land Securities, which has previously argued that owning both offices and retail property smoothed returns, admitted defeat last week, unveiling plans to split itself into three specialised companies - offices, shop and its outsourcing business, Trillium. The market though, seeing no reason to award focus for its own sake, marked the shares down further on the news last week.

Property stocks get whacked when the sector goes over the top of course, and this property peak coincides with an expected broader slowdown that has its roots right back in bricks and mortar. Banks and other City occupiers will have already put new space requirements on hold, squeezing the capital’s office market, while financing for real estate-linked deals is proving tough to come by. Sellers, note KMPG, are seemingly in denial, unwilling to recognise deteriorating values, while buyers don’t fancy getting into a falling market.

Is the sell-off overdone? The last downturn saw a wave of take-privates by property companies frustrated at being market at a large discount to their net asset value. Jim Pickard wrote in the FT over the weekend that, financing constraints or no, there are potential buyers abroad, and possibly cash-rich property grandees at home, already looking at whether there are bargains to be had.

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3 Comments:

Blogger jmf said...

A must read rant on Greenspan from Jeff Matthews!

'The Undertaker' and His Economic Doobie Brothers


9:25 PM  
Blogger jmf said...


U.K. October BSA Mortgage Approvals Fall Annual 14%

3:29 AM  
Anonymous steve Jenkins said...

excellent blog will continue to follow.

4:04 AM  

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