Property group Hammerson has moved higher after an upgrade from JP Morgan, while rival Liberty International is also ahead as analysts speculate on the possibility of a cash call alongside its results tomorrow.
Liberty said last week it was "considering capital raising alternatives" and Singer Capital Markets suggested today that the company, up 10.5p to 327p, could raise £360m with a two for three rights issue at a heavily discounted 150p a share. It said:
"Pre-downgrades [after the results], we think the issue is discounted in the price, but considering the likelihood of a weak update, we are bearish in the short term. Longer term we think forecasters' worst case vacancy assumptions will be outperformed, but the newsflow is going to get a lot worse before it improves. The valuer and Liberty itself may qualify its valuations, demonstrating a preference for mark-to-model [rather than mark-to-market], and much debate."
Mark-to-model is seen by many as a trickier measure, since it depends on whether the assumptions made in the pricing model are realistic; it may also not take into full account the liquidity - or lack of it - if the assets actually come to be sold.
As for Hammerson, it has climbed 14.75p to 325.5p. JP Morgan moved from neutral to overweight, saying the company had one of the best cash flows in the sector and its proposed £584m rights issue would strengthen its balance sheet.
Meanwhile industrial property specialist Segro has jumped 15.25p to 102.25p after it renegotiated loan covenants on its £1.7bn debt. The move, which will cost a one off fee of £8.6m and involve slightly higher interest payments, should dampen speculation of a cash call at the company.
