Great Portland in play again
REMEMBER GREAT PORTLAND ESTATES (GPE), the London property company in which Liberty International accumulated a stake of around 25% earlier this century? There was some surprise when Liberty sold its stake at a healthy profit rather than make an outright bid. But the two remained good friends.
Last year they set up a joint venture – GCP – with an initial portfolio of 17 holdings throughout central London, subsequently acquired other properties and this February completed a swap transaction with The Crown Estate involving 580 000sq ft of property valued at £358m in London’s West End. The partnership is now valued at £654m, so GPE’s 50% stake makes up a fair chunk of its total net assets of around £1bn.
Well, latest scuttlebutt in the city is that bidders may again be sniffing around GPE. Like most of the property sector its share price has had a pretty grizzly time, collapsing from 800p early last year to little more than 300p. It’s just released data was at 30 June, claiming a current NAV of 538p, which is down just 14% since the peak of June last year.
On the one hand, that reflects the extent to which share prices have fallen faster than physical asset values. On the other, it explains why, unless you think West End property values are still headed for a precipitous further decline, you may think this sort of valuation attractive.
Now it’s true that GPC is a less significant part of Liberty International’s assets than of GPE’s, but even so would Liberty be happy to see control of a major joint venture partner changing hands? I wouldn’t think so. So I won’t be surprised if the next step is an announcement that Liberty is rebuilding a stake in GPE. Watch this space.