(LAND.L) Land Securities Group PLC Buy/Sell

By Daryl Loo

LONDON, Nov 19 (Reuters) - British developer Derwent London said on Thursday it is targeting to deliver new office projects from late 2011, backed by improving sentiments and expectations of rising rents in the Central London market.
"Things are more encouraging on the property side ... when you look at the situation 12 months back, I think we've gone to a stronger and more confident situation," Chief Executive John Burns said in an interview.
Developers in the UK had cancelled or postponed new projects in the past year after the global financial crisis crushed confidence and ramped up of the cost of development.
The mood has since shifted as UK property majors Land Securities and British Land announced improved results earlier this week, marking a likely end to a two-year slump in UK commercial property.
By 0940 GMT, Derwent shares were down 2 percent, against a 1 percent fall in the UK property stocks index.
Derwent said its existing portfolio has the potential for redeveloped floor area of more than two million square feet (sq ft), and that it is preparing for the next stage of the property cycle by progressing schemes from its pipeline.
"We will have a progressive programme of a couple of 100,000 sq ft through 2010 that we're working on, and we will pick up in 2011 as well," Burns said.
The company is constructing two office projects that are 65 percent pre-let so far -- a 85,000 sq ft building on Fitzroy Street due to complete in December, and the 263,000 sq ft Angel Building due in the summer of 2010.

While industry data continue to show weakening rental values in the UK, Derwent said it sees clear signs that rents and incentives are stabilising as supply decreases, and expects rents to start rising from 2010.
"I won't be surprised if it was in the first or second quarters of the year that we will see some rental improvements. You're not going to see a spike like in the past, but I think people want to see something steady," Burns said.
The company reported new lettings for the third quarter totalled 48,900 sq ft (4,540 sq m), generating rents of 1.3 million pounds ($2.2 million) a year, at rental levels in line with its estimated rental values (ERVs) at end-June.
This was 13.1 percent below December 2008 ERVs however.
The company also concluded 14 rent reviews and nine lease renewals at 3 percent above the June ERV, it said.
It disposed of 99.9 million pounds worth of properties in the third quarter, bringing portfolio sales year to date to a total of 190 million pounds after costs.
Derwent said that with limited capital expenditure, no significant acquisitions, and the gains from its disposal, its debt has been cut to 798.1 million pounds, from 849.3 million, over the quarter.
The company continues to look at making property acquisitions, although supply has been limited, Burns said.
"I don't think there's been a glut of property that's available. Most of our transactions have been off the market, and we continue with discussions like that," he said.

(Editing by Andrew Macdonald)

($1=.5946 Pound)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters) Keywords: DERWENT IMS/ (daryl.loo@thomsonreuters.com; +44 (0)207 542 5228; Reuters Messaging: daryl.loo.reuters.com@reuters.net)

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LONDON, Nov 19 (Reuters) - British developer Derwent London said on Thursday it is targeting to deliver new office projects from late 2011, as improvements in sentiments towards the Central London market prompted its return to development.
"The recent signs of improvement in the central London market have meant that we are now preparing for the next stage of the property cycle," Derwent said in a trading update.
UK property majors Land Securities and British Land both announced improved results earlier this week, marking an end to a two-year slump in the commercial property market.
Derwent said its new lettings for the third quarter totalled 48,900 sq ft (4,540 sq m), generating rents of 1.3 million pounds ($2.2 million) per annum, at rental levels in line with its estimated rental values (ERVs) at the end of June.
This was 13.1 percent below December 2008 ERVs however.
The company also concluded 14 rent reviews and 9 lease renewals at 3 percent above the June ERV, it said.

"In recent months, there has been a substantial increase in investor demand, particularly for central London properties. We have taken advantage of this improved sentiment with sales of non-core, mature properties," Derwent CEO John Burns said.
Derwent has made disposals of 99.9 million pounds in the third quarter, bringing its portfolio sales year to date to a total of 190 million pounds after costs, it said.
(Reporting by Daryl Loo)
(See www.reutersrealestate.com for the global service for real estate professionals from Reuters) ($1=.5946 Pound) Keywords: DERWENT IMS/

(daryl.loo@thomsonreuters.com; +44 (0)207 542 5228; Reuters Messaging: daryl.loo.reuters.com@reuters.net)

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Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

By Daryl Loo

LONDON, Nov 18 (Reuters) - British Land shares have rebounded nearly 60 percent since March, far ahead of the UK's market for bricks and mortar, splitting opinions on whether the blue chip real estate firm's rally still has legs.
The UK property stocks index -- dominated by British Land and its peers Land Securities and Hammerson -- doubled in eight months, outperforming the FTSE 100's 45 percent rise over the same period.
By contrast, capital values of UK commercial real estate, as measured by Investment Property Databank's (IPD) benchmark monthly index, only bottomed out in July and have since started to rebound, up about 3 percent in as many months.

British Land on Tuesday posted its first rise in net asset value since 2007, soothing fears about the property burdens carried by vulnerable UK banks.
JPMorgan analyst Harm Meijer, who has an "overweight" recommendation on British Land shares, notes further upside to the stock could be limited by the share price's 37 percent premium to adjusted net asset value (NAV).
"(We) believe one has to be very bullish on property values to see good upside from (British Land's) current share price level," Meijer said.
Romney Fox, investment manager at Aberdeen Asset Management's Pan-European equity team, argued British Land's share price premium to NAV did not necessarily suggest the time was ripe to take a profit.
"In British Land's case it's mostly fairly good, large size retail and office space in the UK. Property values are just starting to turn, and you'd say that those values are attractive to buy in this market," Fox said.

The counter argument is that the UK REITs have far outpaced the real property market recovery, which itself could still be at risk due to weak economic fundamentals and poor demand.

(For a graphic comparing UK REITs and capital values, click: http://graphics.thomsonreuters.com/119/UK_IPDFT1109.gif)
Brokerage Panmure Gordon, which on Wednesday maintained its "sell" recommendation for British Land, sees wider risks to the recovery in the UK commercial property market, as banks continue to hold a large amount of property stock and refinancing issues.
"It would certainly be risky to assume at this stage that commercial property values across all sectors and property grades are a one-way, straight-line bet," Panmure analysts Mark Hughes and Andrew Saunders said in a note.
"British Land deserves to trade on a premium to forecast NAV and we really like the portfolio. However, we remain concerned about the size of the current NAV premium and therefore remain sellers," Panmure's analysts said.

(Editing by Andrew Macdonald)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

(For more Reuters BUY or SELL stories, click) Keywords: BUYSELL/BRITISHLAND (daryl.loo@thomsonreuters.com; +44 (0)207 542 5228; Reuters Messaging: daryl.loo.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

By Daryl Loo

LONDON, Nov 18 (Reuters) - British Land shares have rebounded nearly 60 percent since March, far ahead of the UK's market for bricks and mortar, splitting opinions on whether the blue chip real estate firm's rally still has legs.
The UK property stocks index -- dominated by British Land and its peers Land Securities and Hammerson -- doubled in eight months, outperforming the FTSE 100's 45 percent rise over the same period.
By contrast, capital values of UK commercial real estate, as measured by Investment Property Databank's (IPD) benchmark monthly index, only bottomed out in July and have since started to rebound, up about 3 percent in as many months.

British Land on Tuesday posted its first rise in net asset value since 2007, soothing fears about the property burdens carried by vulnerable UK banks.
JPMorgan analyst Harm Meijer, who has an "overweight" recommendation on British Land shares, notes further upside to the stock could be limited by the share price's 37 percent premium to adjusted net asset value (NAV).
"(We) believe one has to be very bullish on property values to see good upside from (British Land's) current share price level," Meijer said.
Romney Fox, investment manager at Aberdeen Asset Management's Pan-European equity team, argued British Land's share price premium to NAV did not necessarily suggest the time was ripe to take a profit.
"In British Land's case it's mostly fairly good, large size retail and office space in the UK. Property values are just starting to turn, and you'd say that those values are attractive to buy in this market," Fox said.

The counter argument is that the UK REITs have far outpaced the real property market recovery, which itself could still be at risk due to weak economic fundamentals and poor demand.

(For a graphic comparing UK REITs and capital values, click: http://graphics.thomsonreuters.com/119/UK_IPDFT1109.gif)
Brokerage Panmure Gordon, which on Wednesday maintained its "sell" recommendation for British Land, sees wider risks to the recovery in the UK commercial property market, as banks continue to hold a large amount of property stock and refinancing issues.
"It would certainly be risky to assume at this stage that commercial property values across all sectors and property grades are a one-way, straight-line bet," Panmure analysts Mark Hughes and Andrew Saunders said in a note.
"British Land deserves to trade on a premium to forecast NAV and we really like the portfolio. However, we remain concerned about the size of the current NAV premium and therefore remain sellers," Panmure's analysts said.

(Editing by Andrew Macdonald)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

(For more Reuters BUY or SELL stories, click) Keywords: BUYSELL/BRITISHLAND (daryl.loo@thomsonreuters.com; +44 (0)207 542 5228; Reuters Messaging: daryl.loo.reuters.com@reuters.net)

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Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.