European rather than UK quoted companies are more likely to be takeover targets in 2005.
Despite denials, UK shopping centre owner Liberty International has been tipped as a target for cash-flush Australian shopping centre owner Westfield in recent weeks. US funds and real estate investment trusts such as Simon Group are also said to be eying up the UK.
But ABN Amro analyst Jonathan Paul said higher-yielding European shopping centre stocks, which typically have a dividend yield of above 5% – against less than 3% for Liberty – were more attractive to Australian and US predators.
“The dynamics show that it doesn’t make a lot of sense to invest in the UK,” Paul said. “If Westfield is to offer a price attractive to UK shareholders, they will have to persuade their own shareholders to accept a lower dividend yield, or that there is some other compelling reason to invest.”
A setback in UK property share prices, which rose 46% in 2004, through either further delays to the introduction of REITs, or punitive reforms to the UK lease code could even up the odds of UK takeovers.
However, another analyst said: “There is a certain presumption in Australia that UK shopping centre managers are incompetent and that they could change that.
“In Australia they can put up a shopping centre in two to three years, and over here it takes seven to eight years. There is no real appreciation of the planning environment that operates in the UK.”
Eurohypo chief executive Paul Rivlin said: “Liberty is one of the best run companies in Europe. It is hard to see somebody who is less familiar with the market making that much better a job.”
As well as offering higher yields, European shopping centre stocks are less tightly held.
Dutch pension fund ABP has had talks with Westfield in the past 12 months about its significant stakes in European shopping centre owners Rodamco and Corio.
By selling its stake to Westfield, ABP helped it take out Rodamco North America in 2000.
