British Land Profit Triples on Asset Values, Tax Gain (Update1) (Bloomberg)
2007-02-13 02:51 (New York) By Peter Woodifield Feb. 13 (Bloomberg) -- British Land Co., Europe's largest property company by assets, said fiscal third-quarter profit almost tripled as the value of properties increased and it got a tax boost after converting to a real estate investment trust. Net income in the three months ended Dec. 31 increased to 1.5 billion pounds ($2.9 billion), or 285 pence a share, from 508 million pounds, or 97.5 pence, a year earlier, the London-based company said in a statement today. ``We have a full agenda for British Land to cement our position as a flagship of the new REIT regime,'' Chairman Chris Gibson-Smith said in the statement. ``The business continues to make good progress and is well positioned for the future.'' British Land was one of nine U.K. real estate companies to convert to a REIT on Jan. 1, the first possible day. Britain's six biggest property companies will have combined tax liabilities of 3.7 billion pounds erased by changing to REITs. That's about four times more than they will pay in conversion charges. Net asset value, the measure used by analysts and investors to gauge U.K. real estate company performance, rose 3.8 percent for British Land to 1,685 pence at Dec. 31 from three months earlier before charges relating to REITs. The third-quarter results included a charge of 338 million pounds to convert to a REIT, equivalent to 2 percent of its assets, as well as a charge of 77 million pounds relating to debt refinancings. In addition it eliminated deferred taxes of 1.65 billion pounds that it will no longer be liable for as a REIT. British Land prelet 54 percent of a speculative development it's building in London's main financial district known as the City, the company said in a separate statement today. Law firm Mayer, Brown, Rowe & Maw LLP is taking 223,000 square feet in 201 Bishopsgate, which is part of British Land's Broadgate office complex. The firm has an option for a further 61,500 square feet in the 408,000 square-foot building. Central London offices are the best-performing type of U.K. commercial real estate. Offices in the West End, the most expensive in the world, returned 32 percent last year, compared with 18 percent for all U.K. commercial real estate, London-based researcher Investment Property Databank Ltd. said Feb. 1. British Land shares fell 9 pence to 1,679 pence in London yesterday, valuing the company at 8.75 billion pounds. The stock has gained 42 percent in the past year.
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Liberty International Profit Jumps on Rising Rents, Values (Bloomberg)
2007-02-14 02:23 (New York) By Simon Packard Feb. 14 (Bloomberg) -- Liberty International Plc, the U.K.'s largest mall owner, said profit quadrupled last year as it opened new shopping centers and acquired Covent Garden market in London while the value of its properties increased. Net income increased to 1.56 billion pounds ($3 billion), or 33.9 pence a share, from 366 million pounds, or 30.1 pence, a year earlier, the London-based company said today in a statement. Chief Executive Officer David Fischel is betting Liberty's out-of town malls, the MetroCentre in Gateshead, will attract more shoppers than rival locations and enable the company to raise rents. In August, Liberty paid 421 million pounds to buy the seven-acre Covent Garden site, one of the main destinations for shoppers in central London. ``We are well placed to continue to prosper and to respond to challenges which lie ahead,'' Chairman Robert Finch said in the statement, announcing a 10 percent increase in the second- half dividend to 17.25 pence a share. Net rental income rose 13 percent to 341 million pounds. An increase in the value of its properties added 587 million pounds to 2006 earnings. Profit from derivatives added a further 164 million pound to earnings last year.
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Property – Asia
2007-02-14 01:49 (New York) By Michele Batchelor Feb. 14 (Bloomberg) -- CapitaLand Ltd., Southeast Asia's largest developer, said fourth-quarter profit rose fivefold, better than analysts expected, helped by a rebounding Singapore home market and divestment gains. The stock rose to a record. Net income increased to S$455.8 million ($296 million), or 16.2 cents a share, from S$93.2 million, or 3.3 cents a share, a year earlier, the company said in a statement to the Singapore stock exchange today. That's higher than the S$129 million median estimate of five analysts surveyed by Bloomberg News. CapitaLand and City Developments Ltd., Singapore's biggest developers, are tearing down old apartment blocks and buying more land as the longest economic expansion in more than five years fuels housing demand. Home prices in the city-state rose 3.8 percent in the fourth quarter, the biggest gain in seven years. ``I'm still bullish on the Singapore property market,'' said Winson Fong, who manages $2 billion at SG Asset Management in Singapore, including CapitaLand shares. ``The economy is doing well, unemployment is low. A lot of projects are going on in full stream, I can't see any particular bad news.'' The stock rose as much as 30 cents, or 4.1 percent, to S$7.55, trading at S$7.50 at 2:14 p.m. Singapore time.
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India Property Stocks Fall After Cash Limit Is Raised (Update1) (Bloomberg)
2007-02-14 02:30 (New York) By Saikat Chatterjee Feb. 14 (Bloomberg) -- Unitech Ltd., India's largest real- estate developer by value, and other property stocks fell on concern mortgage rates may rise after the central bank yesterday increased the cash reserve limit for banks. Unitech fell for a fifth day, its longest losing streak since Dec. 21. The shares fell 10 percent to 373 rupees at 12:40 p.m. on the Bombay Stock Exchange. Parsvnath Developers Ltd., a builder of houses and malls, shed 2.8 percent to 290 rupees. Ansal Properties & Infrastructure Ltd. declined 5 percent to 672.45 rupees. Starting March 3, banks must keep cash equivalent to 6 percent of deposits, compared with 5.5 percent at present, the central bank said last evening. The measure, which will drain as much as 140 billion rupees ($3.2 billion) from banks, is aimed at containing inflation, the Reserve Bank of India said. ``The cash reserve ratio hikes by the Reserve Bank of India further boosts the likelihood of an increase in home-loan rates,'' Suhas Rema Harinarayanan, an analyst with UBS Securities India Pvt., said in a note to clients yesterday. State Bank of India, India's biggest lender, expects lending and deposit rates to rise following the cash limit increase, T.S. Bhattacharya, managing director of the bank, said yesterday. Higher mortgage rates may crimp demand for homes. ICICI Bank Ltd., India's biggest lender to consumers, plans to increase its deposit and lending rates, V. Vaidyanathan, an executive director, said today. Mumbai-based ICICI from Feb. 9 raised its benchmark lending rate by 1 percentage point to 14.75 percent, the second increase since December. ``The low interest rates had been a big driver for the 46 percent compound annual growth rate in disbursements of home loans over the past five years and the consequent near-80 percent increase in property prices in the past two years,'' Harinarayanan said.
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Liberty up as shopping centre occupancy hits 99% - Financial Times
Liberty International proved retailer demand remains strong for space in the best shopping centres as it reported occupancy levels of 98.6 per cent for its sites, which include Lakeside and MetroCentre. Shares in Britain's third-biggest listed property company rose 28p to £13.18 on a confident set of annual results. The company reported a rise in adjusted net asset value per share to £13.27 (£11.88) in the year to December 31 after a one-off £154m (41p a share) conversion charge to become a Reit, a new type of tax-free property vehicle. Without the charge the figure would have been £14.25. By becoming a Reit, Liberty has wiped out more than £1bn of tax provisions. Profit, before valuation and exceptional items, was £155m (£121m), on rents up 13 per cent to £341m. The value of the company's properties was £8.2bn (£7.1bn). Most of Liberty's assets are regional shopping centres but it also has other properties including the seven-acre Covent Garden estate, bought last year for £421m. The group's £353m US assets will become a private Reit, giving it the same tax-free status as the mainbusiness. The board proposed a final dividend of 17.25p (15.25p) bringing the total to 31p (28.25p).
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Property – US
Equity Office Shareholders' Reinvestment Sparks Downgrade (Bloomberg)
2007-02-14 16:21 (New York) By Brian Louis Feb. 14 (Bloomberg) -- Shareholders of Equity Office Properties Trust didn't take long to put the money they made from the $39 billion sale of the company to Blackstone Group LP back into the real estate investment trust market. The windfall and the quick reinvestment prompted Deutsche Bank analyst Lou Taylor to downgrade 15 REIT stocks yesterday to ``hold'' from ``buy'' because they were close to or had exceeded his price targets and he didn't see a reason to raise the targets higher. In his report, he wrote that over the previous four trading days, trading volume in REIT stocks surged from $1.9 billion to $4.4 billion. Those figures exclude trading in shares of Equity Office and Vornado Realty Trust. Vornado had dueled Blackstone for weeks for the 540 office buildings Equity Office owned around the U.S. The sale to Blackstone closed on Feb. 9. The increased trading volume ``suggests that the EOP capital is being deployed rather quickly'' and because of that ``we think there is less chance for the shares to move much higher from here,'' Taylor wrote. ``The bulk of the move yesterday'' was from index funds, such as Vanguard Group Inc. and Barclays Global Investors ``having to redeploy according to the new weight,'' Taylor said in an interview. When a company is sold, index funds have to reinvest the money from the sale into shares of other companies in the index they track. ``People got their money on Monday'' and ``we weren't sure if it was going to be Monday or Tuesday'' when the reinvestment would occur, Taylor said. On Tuesday, he said, ``they did it.'' The Bloomberg Real Estate Investment Trust Index rose 1.8 percent yesterday and over the past year has surged 33 percent. ``Given the valuations, the sharp run up and lack of another large funds flow catalyst, we think the shares could stall or even correct to the levels before the EOP transaction in mid-November,'' Taylor wrote. Blackstone struck its original agreement to buy Equity Office on Nov. 19 at $48.50 a share. Vornado entered the bidding in January before eventually being trumped by Blackstone's all- cash offer of $55.50 a share. Vornado's last offer was $56 a share in cash and stock. The stocks Taylor downgraded to ``hold'' from ``buy'' included Brookfield Properties Corp., Simon Property Group Inc. and Kimco Realty Corp. Taylor, who doesn't own shares in the stocks, maintained ``buy'' or ``hold'' ratings on 24 other stocks. His top picks are SL Green Realty Corp., Public Storage Inc., Equity Residential and General Growth Properties Inc.
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Metrovacesa Shares Slump on Plan to Split Company (Update4) (Bloomberg)
2007-02-21 12:11 (New York) By Sharon Smyth and Peter Woodifield Feb. 21 (Bloomberg) -- Shares of Metrovacesa SA had their biggest drop for nearly five months, wiping about 1.1 billion euros ($1.4 billion) off the value of Spain's largest real- estate developer, after the owners ended a yearlong battle by agreeing to split the company. Chairman Joaquin Rivero, along with another investor, and the Sanahuja family each built up stakes in the Madrid-based developer last year, fueling takeover speculation. Those shareholders now plan to divide Metrovacesa into a Spanish and a French company, instead of bidding against each other. ``The fight for the company led to an unrealistic and highly overvalued share price,'' said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages the equivalent of $9.4 billion. ``Metrovacesa should fall to 85 euros per share; until then, they just aren't worth investing in.'' Metrovacesa's shares dropped 9.90 euros, or 8.4 percent, to 107.95 euros in Madrid, the biggest percentage decline since Sept. 27, giving the company a market value of 11.5 billion euros. The stock has advanced 63 percent in the past six months. The agreement, announced Feb. 19, will increase the Sanahujas family's stake in Metrovacesa. Rivero, 63, and investor Bautista Soler will become the biggest shareholders in Gecina SA, Metrovacesa's Paris-based unit. Manuel Gonzalez resigned as Metrovacesa's chief executive officer yesterday and the company hasn't named a successor. Shares of Gecina rose 5.3 percent to a record of 149.92 euros in Paris. The stock has gained 46 percent over the last six months, valuing the company at 9.3 billion euros. ``The split is good for Gecina,'' said Tim Leckie, a London-based analyst at JPMorgan Chase & Co. ``The division means the standstill we have seen over the past 11 months regarding management decisions is over, now Gecina can move forward and do what it does best.'' Gecina has called an emergency board meeting for tomorrow. To separate the two companies, the biggest shareholders proposed a share-swap via a public offer at a ratio of 1.7 Metrovacesa shares for each Gecina stock. The offer values Metrovacesa's shares at 75.67 euros and Gecina's stock at 129.36 euros. Rivero and the Sanahujas tried to gain control of Metrovacesa, the largest office landlord in mainland Europe, to take advantage of rising rents in Madrid and the Paris area. In 2005, Metrovacesa bought control of Gecina to gain access to some of Europe's most valuable office buildings as well as tax breaks. Bonds of Gecina, the largest publicly traded office landlord in Paris, are in danger of losing investment grade status as the split from Metrovacesa didn't make Gecina's strategy any clearer, according to Standard & Poor's report. Gecina is rated BBB- by Standard & Poor's, its lowest investment grade. The ranking is on review for a downgrade because of ``the lack of visibility on future ownership structure, strategy, asset portfolio and financial policy,'' Standard & Poor's said. The yield premium that investors demand to hold Gecina's 500 million euros of 4.875 percent bonds due in 2012, instead of similar maturity government debt, narrowed to 96 basis points yesterday from 125 basis points on Feb. 16, according to UBS AG prices, on speculation that Gecina's rating could improve after the split. A basis point equals 0.01 percentage point. The Sanahuja family, owner of 39.6 percent of Metrovacesa, will get Gecina assets worth 1.8 billion euros in addition to raising its holdings in Metrovacesa. Rivero and Soler will gain control of Gecina and 269 million euros worth of Metrovacesa's Spanish assets
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