Newspaper article The Evening Standard (London, England)

British Land Starts the Shivers over Property

Newspaper article The Evening Standard (London, England)

British Land Starts the Shivers over Property

Article excerpt

Byline: MICKEY CLARK

COMMERCIAL property shares came under the hammer today after British Land cautioned that the market had showed signs of slowing.

The UK's second-largest real estate investment trust warned that the property investment case can no longer rely on further positive yield shift.

That was not what investors wanted to hear. The property sector has outperformed the rest of the market in the past few months as the big property developers began their conversion to Reits in order to make the most of the tax advantages offered by the Chancellor.

British Land fell 33p to 1646p, while losses were also seen in Slough Estates, down 1912p to 76312p, Liberty International off 25p to 1301p, Land Securities 41p lower at 2209p, and Hammerson down 22p to 1605p.

Modest gains were the order of the day elsewhere as the FTSE 100 index rose 8.3 to 6361.8.

Artificial joints maker Smith & Nephew marked time at 61214p, despite broker UBS heaping praise on the shares with a buy rating. It has also jacked up its target for the shares from 590p to 670p following last week's better-than-expected profit numbers. Only yesterday S&N bought back 700,000 of its own shares at 611p.

Reuters recovered its poise with a rise of 212p to 433p. In after-hours trading yesterday, Citigroup placed 55 million shares, or 4.3% of the company, on behalf of an institutional shareholder.

There was a lukewarm response to third-quarter numbers from British Energy, with Citigroup repeating its sell rating on the shares. Profits before costs and taxation surged from [pounds sterling]462 million to [pounds sterling]775 million with the nuclear generator assuring the City that repair work on two of its power plants would be completed by next month. But it warned that nuclear output would fall by nine terrawatt hours due to cracks at some of its stations' boilers. It confirmed it would be seeking partners for newbuild nuclear power stations.

In response, Citigroup says 2008-9 "looks nasty". It says: "If we mark to market against current forward electricity prices our profit forecast would come down by some 55%. …

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