Shares in regeneration developer U+I hit their highest level since the onset of the Covid-19 pandemic on news of a takeover by FTSE 100 REIT Land Securities.
The company’s stock jumped by 72% to 148p a share, just shy of Landsec’s 149p offer. The premium to Friday’s close has been described as “pretty punchy” by a real estate equity analyst.
A deal will be a big boost for Landsec’s focus on mixed-use urban regeneration projects. U+I’s three major regeneration schemes, in London and Manchester, are all further ahead in the planning process than any of Landsec’s own projects.
“It does give us the opportunity to deploy capital and generate returns more quickly than our own portfolio does,” Landsec chief executive Mark Allan said.
At JP Morgan, real estate equity analyst Tim Leckie said the deal gives Landsec’s stock “something which has been missing lately: a story”.
“Landsec is saying we can build this sooner, better, and drive improved returns with this transaction,” Leckie added.
U+I’s stock rise made it the best-performing real estate stock of the day by a long way. Next in line was Inland Homes, up by almost 7% to a month-and-a-half high of 50p after posting record annual revenue.
Across the FTSE 350 there were notable drops for several housebuilders – in the FTSE 100, Barratt Developments, Taylor Wimpey, Berkeley Group and Persimmon were all among the session’s six heaviest fallers, down by between 2% and 3%. In the FTSE 350, Vistry Group was also trading down.
The FTSE 100 finished the day at 7,288 points, up by 0.7%. The FTSE 250 was up by 0.5% at 23,211 points.
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