Among the gloomy news pervading the market at the moment, there is a bright spot or two.
One such is property group Liberty International, which has climbed 5.8p to 458.1p after confirming a report it is considering a demerger into a shopping centre business and a London property company, Capital & Counties. It said it needed a number of third party approvals, some of which are still outstanding:
The board will only be in a position to decide whether to proceed or not once it has progressed these matters further.
Shareholders in the company - whose £6.1bn property portfolio encompasses London's Covent Garden, Lakeside Thurrock, Earls Court and Olympia as well as the Gateshead Metro Centre - include the South African Gordon family.
Analyst Harry Stokes at Evolution Securities said it was a sensible move, but there were some structural issues which needed to be overcome.
[The proposed move] improves investor choice but: a) the shopping centres are mature and not widely suited to the demands of retailers today; b) 15% of Capital & Counties' assets are managed by Great Portland Estates; c) CapCo will be dominated by Covent Garden (5.0% initial yield at June) and the Earl's Court urban regeneration – both valuable assets but each with a mass of disparate stakeholders likely to be difficult to manage.
Neither company will be in the FTSE100, and CapCo won't be a real estate investment trust. We suspect that Liberty's South African shareholder base will stick with the shopping centres company as a stable source of cash-flow; CapCo will be the risky side, and we expect divestments from this not least the US and emerging market assets.
Liberty has been trying to repair its balance sheet in recent months, raising £280m in a share placing in September last year after an earlier £592m fundraising in April.
