(LONDON) British property firm Segro plc cautioned about continued weakness in Britain’s property markets, but it bought £400 million (S$1.19 billion) of property in its second half as it took advantage of good buying opportunities. In a trading update yesterday, the firm said financial market turmoil was taking a toll on the UK property market, increasing the likelihood of asset writedowns and reducing the number of active participants in the market.
But it said its pro-forma cash and undrawn debt facilities of £875 million would enable it to take advantage of ‘good buying opportunities’ forged by the market conditions. ‘The UK investment market has seen very few transactions in the second half of the year, with . . . the shortage of credit available to leveraged buyers dramatically reducing the volume of transactions,’ chief executive Ian Coull said.
‘Whilst this will inevitably result in professional valuers writing down the book values of properties, we believe it will create a number of opportunities for well-capitalised companies such as Segro,’ Mr Coull added. Segro shares, which have fallen 45 per cent in the year so far, rose 2.23 per cent to 424.75 pence at 0813 GMT.
The real estate investment trust achieved more than 83,000 square metres of UK lettings in the second half of the year to end-October; an increase of 65 per cent on last year’s levels. It said vacancy levels in the UK and continental Europe were still broadly unchanged from the half-year position at 11.5 per cent and 6 per cent respectively and that 36 per cent of its 394,000 square metre development pipeline had already secured tenants. The firm still saw modest rental growth across its portfolio and its full-year dividend expectations remained unchanged at around 23 pence per share.
Source: Reuters (Business Times 29 Nov 07)