SEGRO and intu lead raft of steady figures…
Some of the biggest UK commercial real estate companies have outperformed the FTSE 350 after posting decent half-year results this week.
Five of the six listed commercial companies that released interim updates saw an uptick in their share prices, with SEGRO and intu leading the pack.
Both companies saw rises of about 3% between Monday and Thursday morning, above the 0.5% rise in the FTSE 350.
SEGRO’s net asset value per share rose by 2.6% in the first half of 2016, a total rise of 14.2% since last June.
Intu reported a net rental income rise at 7.5%, while underlying earnings were up by 12.2%.
SEGRO chief executive David Sleath said: “Even if the broader macro has more uncertainty about it, the structural drivers in our part of the sector are positive.”
Capital & Counties was the only company to have its shares drop after posting interim results.
The company announced a £200m devaluation of its Earls Court project (pictured) on Tuesday to £1.2bn, a 14.3% cut.
● Interim results in the residential sector were mixed, with Countrywide warning of lower profits, despite an income rise of 9.4%. Taylor Wimpey saw a NAV per share rise of 7.8% and a share price rally of 6%, while Countryside said cancellation rates had returned to normal.
…but Europe proves to be a drag for CBRE
CBRE’s European business was hit in the second quarter, despite a strong global performance.
CBRE’s fee revenue, excluding its Global Workplace Solutions division, fell 3% in Europe, while EBIDTA fell 7% from Q2 2015.
In the UK, the company said revenue had slipped by 2% because of referendum-driven uncertainty. As a result, CBRE reduced its expected earnings per share for the year by 3-5%.
CBRE highlighted that in the first half of 2016, occupier outsourcing and property
management, as opposed to more volatile investment transaction activity, accounted
for 69% of UK fee revenue, a sizeable shift from 2013 when it was 19%.
● Colliers International’s European business reported a resilient 11% year-on-year rise in revenue to $117.2m (£89.3m). Growth was 14% on a local currency basis. Adjusted EBIDTA in Europe for Q2 fell by 4% to $17.1m, from $17.8m the previous year. Globally, revenues were up by 21% to $483m compared with Q2 last year.
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Comment: Alan Carter, director, specialist sales, Stifel Nicolaus Europe
A handful of property companies have reported their results over the past week, with portfolio valuations heavily caveated, given post-Brexit uncertainty. But the general mood has been encouraging.
The sector fell by 22% after the Brexit vote but has recovered by 17% from its nadir and the All-Share is up by 5%. Serious underperformance, but there’s a fightback.
SEGRO delivered strong numbers, recording 4% rental growth overall (6% in the UK), a development pipeline nearly 70% prelet, and potential developments still attracting occupier demand.
Intu and Hammerson recorded accelerating like-for-like rental growth in big UK shopping centres at 7% and 3% respectively, with high occupancy and demand. While CapCo got headlines for a write-down on its Earls Court project, that was hardly a surprise, and its Covent Garden retail offering powers ahead.
The occupier markets in retail and logistics appear unaffected, but the London office market has been quiet. Open-ended fund sales have led to caveated valuations for the quoted companies, but the investment market appears far from dead. Next month’s IPD capital numbers may prompt a reality check, but for the moment there is nothing to suggest that the wheels have flown off the real estate wagon. They are still turning, but perhaps at a slower rate.
