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Global Investors Take Stakes In Battered British REIT Giants

Landsec's new development at Piccadilly Circus.

The share prices of some of the best-known British REITs have taken an absolute pasting since the start of the coronavirus pandemic. And this has attracted the attention of global investors who think the price at which they can buy a stake is a bargain.

Last week the brother of a well-known Hong Kong property investor bought a £50M stake in Landsec, while a South African investor has built a 9% stake in Hammerson.

Lifestyle International Holdings, a department-store operator run by Thomas Lau, brother of Chinese Estates founder Joseph Lau, told the Hong Kong Stock Exchange it had bought a £50M stake in Landsec. The stake accounts for less than 1% of the company’s shares. React News first revealed the purchase.

“The equity investment in Landsec was to enable the group to participate in the retail and commercial property market in the United Kingdom without having the need to own such physical properties,” the company said. “The acquisitions will be held by the group for long-term investment purpose with an aim to enhancing the returns on cash for the group in the long run.”

Landsec shares have dropped 45% this year, mainly due to its exposure to the coronavirus-hit sectors of retail, leisure and hotels. New chief executive Mark Allan is undertaking a strategic review of the sectors in which the company operates. As well as its retail and leisure portfolio, it is the largest single investor in London offices. 

The company’s shares trade at a discount of more than 50% to its £8.8B net asset value. 

Given its retail specialism, shares in Hammerson have been even harder hit, falling 80% so far this year. Once an FTSE 100 company, it now has a market capitalisation of just £484M, a discount to its net asset value of around 90%.

That fall has attracted the attention of Lighthouse Capital, a South African property investment firm listed in both Johannesburg and Mauritius. As well as building up a 9% stake in Hammerson’s London-listed shares, it has launched a tender offer for shares in the company listed in Johannesburg. It said it wanted to “take advantage of strategic investment opportunities arising from the financial market volatility.”

With Dutch pension fund APG owning more than 20% of Hammerson, Lighthouse’s move means that two investors own more than 30% of the stock. That means an investor looking to take the company private could quickly build up a stake of the size needed to launch a full offer for the company.