- Acquisition accretive to earnings
- Shares placed at a discount
- Smaller REITs struggle to survive
The divergence in fortunes between large listed commercial property companies and some of the smaller players was thrown into relief today with the announcement by British Land (BLND) it had raised capital for a large retail acquisition on the same day two small REITs (real estate investment trusts) revealed they were packing their bags.
Shares in British Land were steady at 435p after it raised around £300 million in a discounted share placing at 422p per share last night.
BIGGER IS BETTER
The £4 billion market-cap FTSE 100 firm has acquired a portfolio of seven high-quality retail parks across England and Scotland totalling 1.9 million square feet of space for £441 million, of which £300 million came from the share placing.
The parks – which are located in Falkirk, Middlesborough, Nottingham, Rugby, St Helens, Telford and Waterlooville – are 99% occupied and have ‘anchor’ tenants such as Marks & Spencer (MKS), Sainsburys (SBRY) and Tesco (TSCO).
Alongside the announcement, the company reported flat to slightly higher profit for the six months to September and confirmed its forecast for full-year earnings per share of around 28p while adding today’s acquisition would be accretive to earnings in the coming financial year.
Analysts at Panmure Liberum raised their 2025 earnings estimate slightly in response and said they were ‘supportive’ of today’s deal: ‘Retail Parks are a structurally resilient sector, offering sustainable cash returns which will bolt on nicely to British Land’s existing portfolio and operating platform.’
THROWING IN THE TOWEL
At the other end of the spectrum, Atrato Onsite Energy (ROOF) announced it had reached a deal to sell its entire portfolio of solar assets to a joint venture owned by Brookfield (who sold the retail parks to British Land) and RAIM Apollo and would return the cash to shareholders once the company’s liquidation is approved.
Shares in the company jumped 12.5p or 20% to 76.5p on the deal, which values the portfolio at a headline price of £218.7 million against the latest agreed valuation of £224.1 million.
At the same time, shares in Residential Secured Income (RESI), managed by Gresham House, added 4.5p or 8.5% to 59p after the firm proposed the winding down of its activities and returning cash to investors.
The company said that after a ‘thorough review of options for maximising shareholder value’, and with the shares trading at ‘a material, persistent discount to net asset value’, a managed wind-down and the realisation of its assets was the best option.
