Great Port­land in play again

Finweek English Edition - - The Company You Keep -

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.

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