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Property firm British Land plans £300m buyback
[LONDON] British Land plans to spend up to £300 million (S$536.9 million) to buy back its shares in this financial year, the property developer said on Tuesday, citing limited investment opportunities.
The company, which owns the Meadowhall shopping centre in Sheffield and office property at Paddington Central in London, said its shares were trading at a substantial discount to its net asset value, making a buyback a "clear value opportunity".
"Investment in the company's shares at the prevailing discount offers better value than further asset acquisitions," Britain's second-largest listed property developer said in a statement ahead of its general meeting.
The company's shares were the second-top London gainers, up 3 per cent at 622 pence by 0824 GMT, but still about 30 per cent lower than the firm's EPRA net asset value of 915 pence per share as of March 31.
Rival Land Securities was up 1.5 per cent at 1,025 pence.
British Land and Land Securities, both large holders of London office property, have seen the value of their assets fall since the country's vote to leave the European Union last year.
The outcome of the referendum has raised concerns that the worth and allure of London property might be hit by the departure of financial companies to Europe.
In response, British Land has been reducing the amount of space it was developing before securing tenants.
Chief Executive Chris Grigg said on Tuesday that the company had the flexibility to respond to a changing market and was retaining resources to develop its pipeline of opportunities.
British Land's buyback comes a decade after the company's former chief executive announced a £500 million buyback, citing similar market conditions, only to quickly shelve plans.
"2017 looks like a rerun of 2007 and Grigg's gamble of running more leverage risk anticipating an extended real estate cycle is faltering as global bond yields rise," Jefferies analyst Mike Prew said in a note.
"We would sell all the stock we could into this liquidity window," said Mr Prew, who has a "underperform" rating and target price of 500 pence on British Land's stock.