The UK’s biggest property companies have seen a sharp increase in the proportion of their shares being shorted in the past three months.
Around 10% of the stock of the five biggest property companies is being shorted – a process where an investor borrows shares in a company and agrees to sell them to someone else, paying for them at a later date, thus hoping to make a profit if the value has fallen. According to financial information service Dataexplorers, this is up from just less than 6% at the end of September.
Land Securities, British Land, Liberty International, Hammerson and SEGRO have seen the total amount of their stock on loan to short sellers increase by more than a third.
SEGRO has seen the largest jump in the amount of its stock on loan, 7.2% – up from 3.3% at the end of September. British Land and Hammerson have the largest proportion of their stock on loan, 12% each, with Hammerson seeing the amount of its stock lent out doubling in the past three months.
Property share prices have fallen 32% during this period, according to Thompson Reuters Datastream, underperforming the wider UK stock market, which fell 11%.
The rise in the proportion of property shares on loan coincides with the ban on short-selling financial stocks implemented by the Financial Services Authority last October, which ends next Friday.
Many property analysts feared that there would be a rise in the property stocks being shorted, as their performance is similar to that of financial stocks, so they would provide a proxy for short sellers.
However, Dave Butler, spokesperson for trade body REITA, which had called for the ban on shorting to be extended to property stocks, said: “There is little hard evidence as to what impact the ban has had on property stocks.”
Stock on Loan
Hammerson 6% 12%
British Land 8% 12%
Liberty 12% 10%
SEGRO 3% 7%
LandSec 2% 5%
Source: Dataexplorers
