Land Securities, the UK's largest Reit, announced this week that it would commence three major commercial developments in the West End of London with an end value of £655m. On Wednesday, Great Portland announced a near 12 per cent rise in its quarterly net asset value (NAV), and confirmed it would also start three West End developments in the next six months. Meanwhile, British Land has backed a , and has secured a potentially lucrative distressed opportunity from a bank.
"We believe strong rental growth will come in the West End, and being the first to start developing is attractive for occupiers and our shareholders," said Land Securities chief executive Frances Salway. The company has also secured its first distressed purchase from a bank, a £10m development site in the heart of Glasgow's city centre, which will support a £75m retail development. Land Securities continues to look at buying income producing investments, and expects opportunities to purchase these from banks will widen as 2010 progresses. "I certainly never like to overpay. We are prepared to be patient," said Mr Salway.
Believing the City of London office market was up to a year behind the West End, he confessed that Land Securities is "beginning to think about potential timing" for its delayed 'Walkie Talkie' tower development in the Square Mile.
Meanwhile, Hammerson has been commended for its appointment to asset manage and develop retail schemes in Bury and Teeside following the administration of Thornfield Ventures, a failed HBOS joint venture company which is now part of Lloyds Bank. Hammerson stands to earn millions in fees, and has the potential to convert these into equity stakes in the schemes.
"The Reits need to act as workout specialists for the banks, and take carried interests and management fees," says Alan Carter, analyst at Evolution. "Earnings, any earnings, are good!"
