EuroMarket Tuesday: Property stocks follow broader markets lower

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Related Companies British Land Co. Plc (BLND) Hammerson Plc (HMSO)

Related Articles 11/3/2009 British Land, Blackstone Group complete Broadgate JV 11/3/2009 Hammerson sees renewed confidence in UK, French property markets 9/18/2009 British Land sells 50% stake in Broadgate to Blackstone Group

European property stocks ended lower along with the broader equity markets Tuesday, Nov. 3.

The FTSE EPRA NAREIT UK real estate index slipped 1.27% to 1,056, and the FTSE EPRA NAREIT Euro Zone property index lost 1.31% to finish at 1,559.

The U.K.'s broader FTSE 100 dropped 1.32% to 5,037.21, and the DJ Euro Stoxx 50 sank 1.83% to close at 2,712.30.

Shares of Hammerson Plc dipped 0.43% to 390.50 pence Nov. 3 as the British REIT said in an interim managing statement that it sees signs of confidence returning to the U.K. and French property markets despite continued uncertainty.

Lower rental levels have improved demand for office space, the company said, with net effective rents stabilizing particularly in London. In France, the level of vacant space remains low despite falling retail sales, helping to maintain rental levels.

CEO David Atkins said in the statement that increased investment activity is leading to firming U.K. property yields, while France has also seen "encouraging levels of transactions, albeit from a low base." He added that the company is "actively considering both property acquisitions and investment within our existing portfolio."

British Land Co. Plc's shares fell 1.76% to 452.70 pence Nov. 3 as the company said the formation of its joint venture with The Blackstone Group LP was completed following shareholder approval and relevant regulatory clearances.

The companies in September exchanged contracts to form a £2.13 billion joint venture to hold British Land's 30-acre Broadgate office estate in the City of London, with two Blackstone real estate funds acquiring a 50% interest in the asset valued at £1.07 billion.

Also in London, the U.S. government on Nov. 3 sold its embassy building in Grosvenor Square to Qatari Diar Real Estate Investment Co., Qatar's property investment fund, various news outlets reported Nov. 3. Terms of the deal were not disclosed.

The embassy plans to move out of its present building when development is completed on a new one in the Wandsworth area of London by 2017.

Mayor Boris Johnson will announce plans Nov. 3 to accelerate the delivery of public land in London in order to create an additional 32,000 new social homes beyond current targets, London's Financial Times reported the same day.

The move comes amid concerns that national grants for social housing could be sharply reduced after the current round of spending ends in 2011. London is expected to deliver 50,000 affordable homes in the current three-year period, the newspaper said.

Turning to the U.K.'s housing market, the Halifax house price index on Nov. 3 showed that seasonally adjusted house prices rose 1.2% in October to an average of £165,528, representing the fourth consecutive monthly gain. Prices in the three months to October were 2.9% higher compared to the prior three-month period.

The national average house price has risen 2.9% since December 2008 and 7.1% since its trough in April. Year over year, October house prices were 4.7% lower.

Moving to the wider region, the European Commission in its autumn economic forecast issued Nov. 3 said the European Union economy will emerge from recession in the second half of 2009. "A relatively strong temporary pick-up is in the cards for the near term, following the improvements in the external environment, financial conditions, as well as the significant fiscal and monetary measures — with a more gradual recovery foreseen in 2010-2011," the Commission said.

Among significant British property movers, St. Modwen Properties Plc sank 6.87% to 212.90 pence, Daejan Holdings Plc dropped 3.70% to 2,600.00 pence, UK Commercial Property Trust Ltd. slid 2.98% to 73.25 pence, Grainger Plc shed 2.36% to finish at 268.50 pence, Mitchells & Butlers Plc moved down 2.17% to 234.20 pence, Millennium & Copthorne Hotels Plc fell 2.04% to 331.10 pence and SEGRO Plc slid 2.02% to 335.10 pence.

In continental Europe, shares of Metrovacesa SA surged 8.44% to €22.75 while fellow Spanish group Sol Meliá tumbled 6.78% to €5.64, Italy's Risanamento SpA and Immobiliare Grande Distribuzione SpA dropped 6.13% and 4.70%, respectively, to 44 cents and €1.38, Luxembourg's ProLogis European Properties declined 4.33% to €4.20, Castellum AB slipped 4.18% to 63.00 Swedish kronor and Germany's IVG Immobilien AG fell 4.17% to €5.75.

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