British Land Share Discussion Threads

[jonwig] 18/1/2019 08:57

FT:

Some of the UK’s biggest listed landlords face rent cuts as Debenhams seeks to ease the burden of a store portfolio that includes leases stretching as far as 2083.

British Land and Intu have the largest exposure to the struggling retailer, according to data from Colliers International, although people close to both companies insisted their stores were among Debenhams’ most successful.

Other groups with significant exposure include Landsec, Capital & Regional and Hammerson, the data shows. At least 30 of Debenhams’ 165 stores are owned by listed groups.

[chillpill] 18/1/2019 08:55

The 40% discount to Net Asset Value is just too big.

Historically it has always traded very close to its NAV.

Yes retail has issues but considering their prime assets is it really that bad?

I doubt it.

[shieldbug] 18/12/2018 19:21

Online retail has some fundamental issues that need resolving if it is really going to be a success. For one thing a lot of deliveries go missing and have to be replaced. Replacing lost packages is costly for the seller. Missing deliveries create anguish and unfulfilled expectations for the consumer. Something that you do not get buying in-store where the cashier completes the transaction to both parties satisfaction.

Click and collect and the omnichannel solves a lot of these issues. Business rates and online sales taxes will also shape how this turns out.

A lot of business gets done online, and attracts bucket loads of venture capital and other investments but how much of it profitable? How resilient is that business? What happens when the digital equivalent of shoplifters start to exploit your sales and logistics and on a grander scale? If you don't make money the business ain't going to survive.

Time will tell how viable the logistics and economics of online shopping really are. Just because there is a craze for it today doesn't mean it will be the norm tomorrow. In the meantime of course there will be casualties in bricks and mortar retailers.

British Land seem switched on to gathering data and analysing it.

The discount to NAV is also reassuring while all this plays out.

[shieldbug] 18/12/2018 18:34

British Land buys first dedicated building for Storey -

It will be interesting to see how this flexible working office space thing works out come the next recession. BL should be ok if they own the building but WeWork and Fora may struggle to pay the rent.

[skyship] 18/12/2018 16:35

"Better sectors with better yields available."

Hmm...could you perhaps suggest a few?

[porsche1945] 17/12/2018 17:23

The read across from asos is appalling....apart from casual dining cinemas and stuff i just cant see the retail enviro coming back, maybe if brexit gets kicked into touch and sterling recovers, people will have more money to spend and stores can buy in stock cheaper so margins improve...possibly.,,.you have to think with the city of london now suffering a slow puncture as it has been described due to brexit, whether this whole space, office and retail is going nowhere for years. Better sectors with better yields available.

[jonwig] 12/12/2018 09:33

"The value of retail property tumbled 1.9 per cent in November, marking the sector’s sharpest month-on-month drop since May 2009, according to new figures from real estate advisor CBRE."

[shieldbug] 11/12/2018 07:07

Retail Gazette has a headline of they are sold. Then proceeds with "British Land is due to sell off its last 4 remaining Debenhams Stores. Could be marketing or it could be a deal.

[essentialinvestor] 10/12/2018 19:50

They are only being marketed atm. They completed on one Deb freehold sale recently, around £48 million from memory.

[shieldbug] 10/12/2018 19:08

BL selling 4 Debenhams stores. No information about price vs valuation. Probably a good thing for the share price to start reducing exposure to retail. Bad news about Crossrail that BL have talked of as key to their Offices strategy. Mind you with Brexit and structural changes in retail that is least of their problems.

[essentialinvestor] 03/12/2018 17:18

A distinct lack of director buying accross the sector atm.

Had a very small amount of SHB today, but in all honesty
I can't make a buy case for Shaftesbury here given heightened uncertainty.

[muffinhead] 03/12/2018 17:11

Low LTV of limited protection when your commercial tenants are up to the neck in debt or being crucified by online competition

[warranty] 29/11/2018 22:15

Thanks for those SKYSHIP, excellent pieces explaining the other side but my problem is that none of this is being voiced by the Brexit Leaders. We hear constantly the negatives from the Remain camp so is it any wonder Brexiteer voters are being worn down by it? Add in the fact that if we did now choose to stay in the EU it would not be a case of just going back to the previous arrangement because we would lose the £4Bn Rebate, be liable for the increased contribution in the next funding round which would be a further £3-4Bn. We'd also have to join the Euro, Schengen and the European Army. It's publicly stated from Brussels that the objective is a single European State with further limited autonomy from individual Governments. Add in that it's only a matter of time before Turkey joins resulting in massive immigration again. It's time some of these points were highlighted and also costed as is done the other way round. Sorry to be off topic but it's all relevant to BLND and the negativity around us leaving is causing much of the fall in share price

[essentialinvestor] 29/11/2018 17:33

This decline runs deeper than Brexit.

More a questioning of the valuation on their retail portfolio,
and future income generation from these assets - as with Land.
Brexit uncertainty is killing sentiment currently, but that alone
is not responsible for the share price near these levels.

[pj fozzie] 29/11/2018 17:23

Thanks Skyship, a good couple of articles.

And to get back on topic, I'm happy to keep holding BLND, banking the divi. If the share price gets close to a fiver, I'm buying more.

Cheers,
PJ

[skyship] 29/11/2018 16:52

Also this great article by Ruth Lea. There is nothing wrong in trading under WTO rules - the Remainer concept of "Crashing Out" is another Project Fear absurdity
===================================================================

We must prepare for a managed No Deal. It would be a liberation, not a crisis
By Ruth Lea - November 28, 2018

Ruth Lea CBE is economic adviser at the Arbuthnot Banking Group

I have already written on the Government’s atrocious ‘deal’ with the EU. The Withdrawal Agreement and the ‘Political Declaration on the framework for the future relationship’ would shackle this country and have nothing to commend them. The indications are that the House of Commons will reject the ‘deal’ on 11 December, when the ‘meaningful217; vote is due to take place. One can only hope so.

If it is voted down, the default position would be No Deal, trading under World Trade Organisation (WTO) rules. If the Parliament wished (for example) to have a second referendum and/or postpone Brexit then enabling legislation would have to be passed – before 29 March 2019. Time is running out.

There are still voices suggesting there is scope for renegotiating our ‘deal’ with the EU before Brexit, to be nearer a Canada-style relationship for example. But the politics suggest this is simply not on the cards, and has not been for many months. Realistically, there are two clear choices: the ‘deal’ as agreed by the EU on 25 November and No Deal. If indeed the ‘deal’ is voted down, then we must, we really must, start preparing for a managed No Deal, trading under WTO rules. We must start to make a strong, positive case for it. And there is a strong, positive case.

A managed No Deal

No Deal basically refers to the absence of an agreed trade agreement, prior to Brexit Day. It does not imply the UK and/or the EU would make no mutually beneficial contingency arrangements concerning issues such as aviation, road transport, visas, residency, passports and customs. Yet I have heard some commentators, doubtless mischievously, suggest that planes, for example, would be grounded unless there is a ‘deal’, implying an all-encompassing agreement such as the Withdrawal Agreement.

Clearly, a No Deal outcome has to be prepared for. It has to be ‘managed’;. It would be the height of negligence if the British Government and/or the EU failed to be fully prepared.

It is important to realise that both the UK Government and the EU have made progress on this score. The British Government launched its No Deal guidance notes in August and 106 notes, according to my calculations, have already been released. They cover a very wide range of issues including driving and transport, farming and fishing and importing and exporting (including Customs). Given the increasing possibility of a No Deal outcome, it is incumbent on the Government to ensure these notes cover all bases, and other necessary administrative arrangements are fully operational by next March.

The European Commission, meanwhile, has already issued nearly 80 ‘Brexit preparedness notices’, covering a wide range of topics including financial services, transport and health and food safety. In addition, the Commission has recently released its Contingency Action Plan ‘in the event of a no deal scenario with the UK’, to minimise possible disruptions for the EU’s citizens and businesses. The Commission’s priority areas were residency and visa-related issues, financial services, air transport, customs, sanitary/phytosanitary rules, the transfer of personal data, and climate policy. It is in the EU’s interests, as well as ours, that the planes still fly.

Trading under WTO rules is normal

Given the agonies in negotiating the Withdrawal Agreement and Political Declaration, one could be forgiven for believing that trading under WTO rules is to be avoided at all costs; that trading outside the comfort blanket of the Customs Union and the Single Market would be very uncomfortable indeed. Incidentally, I believe that the supposed difficulties of trading outside the EU’s Customs Union have been grossly blown up out of proportion in the negotiations.

In reality, nothing could be further from the truth. Trading under WTO rules is not a matter of ‘falling off a cliff’ into the abyss. On the contrary, it is, for much of UK and international trade, quite normal. The UK already conducts more than 55 per cent of its export trade with non-EU members, primarily under WTO rules, and the proportion is rising. Even if allowance is made for those non-EU countries that have preferential trade deals with the EU (which may not immediately carry over on Brexit), about half of our exports go to the remaining non-EU countries.

There is no doubt that UK exports to non-EU countries have grown more quickly than to EU countries in recent years. Total exports over in the period 2007-17 grew by over 60 per cent, whilst exports to the EU and the non-EU expanded by around 40 per cent and 80 per cent respectively. Given that the EU is a relatively sluggish and saturated market, this is wholly unsurprising. Commercial opportunities drive trade rather than the supposed allure of the EU’s Customs Union and Single Market. Moreover, we shall, of course, continue to have ‘access’ to EU markets under WTO rules, as the US has ‘access’ to EU markets now. Similarly, EU exporters would continue to have ‘access’ to the UK market, which is good news for them as they had a visible trade surplus of £95billion with the UK in 2017!

The WTO’s rules are tried and tested

The WTO’s rules really are comprehensive, tried and tested. Three points, in particular, need making over and over again.

The first point concerns the UK’s membership of the WTO. We are members and we will continue to be members. In October 2016 Roberto Azevêdo, the Director General of the WTO, made this very clear. He said: ‘The UK is a member of the WTO today, it will continue to be a member tomorrow. There will be no discontinuity in membership. They have to renegotiate [their terms of membership] but that doesn’t mean they are not members. Trade will not stop, it will continue and members will negotiate the legal basis under which that trade is going to happen. But it doesn’t mean that we’ll have a vacuum or a disruption.’ He could not have been clearer.

Secondly, disciplined rules based on the principle of non-discrimination are at the heart of the WTO’s trading regime. Concerning tariff barriers for goods (services do not have tariffs), WTO members must not treat any member less advantageously than any other, unless they form preferential trade agreements or customs unions. Concerning non-tariff barriers for goods, the WTO’s rules limit the circumstances in which they can be applied. A country cannot discriminate against exporters on product standards, for example. Once a ‘domestic̵7; standard has been imposed, it must be generalised to foreign countries’ exporters. This is especially relevant as the UK will be compliant with the EU’s standards on Brexit Day.

Turning to services, the WTO’s General Agreement on Trade in Services (GATS) also operates on the principle of non-discrimination. Outside preferential agreements and restrictions on market access must be applied uniformly across all countries. Any trade disputes, whether for goods or services, between member states are dealt with by the WTO’s Dispute Settlement System (DSS).

Thirdly, the WTO has made huge strides in facilitating trade across customs borders in recent years. Under the landmark Trade Facilitation Agreement (TFA), developed countries with adequate resources are expected to install state-of-the-art border systems in order that trade should not be impeded. Most countries now permit traders to submit their customs documentation electronically in advance of the goods arriving at the border. Virtually all submissions of the EU’s own Single Administrative Document (SAD), for declaring imports and exports, are now made online, for example. This means that most trade arriving from countries that are members of neither the Single Market nor the EU Customs Union suffer little or no hold-up at the border when entering the EU. There is no reason for this to change after Brexit. Streamlined, computerised borders are the norm.

The WTO No Deal is liberating

Finally, a No Deal, trading under WTO rules, unequivocally delivers Brexit. We would be outside the Customs Union and the Single Market and our institutions and laws would be supreme. It is liberating.

We would, moreover, be free to use the new economic freedoms to give the economy a real boost. Outside the Customs Union, we can negotiate our own trade deals with fast-growing and friendly countries. Indeed, we would be an excellent position to negotiate a Free Trade Agreement with the EU – in a much better position than envisaged by the Political Declaration. We can also cut tariffs, for example on foodstuffs, to benefit consumers. Outside the Single Market, there is scope for regulatory modernisation and reform, to give businesses a lift, and our immigration policy can be adapted for the social and economic needs of the country.

These are the economic prizes of Brexit, primarily why I voted to leave the EU. But they are largely blocked by the truly appalling Withdrawal Agreement and its unlovely sibling, the Political Declaration.

[skyship] 29/11/2018 16:47

pj fozzie - personally I just don't understand the defeatist Remainers:
=======================================================================

29 November 2018
The Bank of England’s Brexit forecasts aren’t just wrong. They’re absurd

By Andrew Lilico

Why does the Bank of England assume the British economy will be less open after Brexit?

Paul Krugman - no fan of Brexit - has accused the Bank of England of motivated reasoning in its forecasts

The UK economy is not going to contract 8 per cent in a year, no matter how disorderly Brexit gets

Yesterday the Bank of England published its latest Brexit analysis. The scenarios the Bank paints include some that are lurid, wild and absurd, and, of course, it is those scenarios that have attracted all the headlines.

In particular, the Bank’s scenario for a disorderly no deal Brexit has GDP contracting 8 per cent in a year. That’s right, contracting, and that’s right, in one year. To put that into context, the highest annual contraction in GDP since modern records began was in 2009, when the financial crisis led to about half the UK’s banking system being nationalised and the worst recession since the 1920s. The Bank is claiming that in a no deal Brexit scenario the contraction in one year could be twice as much as that.

An 8 per cent contraction in GDP is not the kind of thing that happens as the result of an economic shock or a financial crisis. It is what happens if there is a civil war, or the economy experiences hyperinflation, or the sort of one-year contractions experienced in Communist countries when the Soviet Empire collapsed and there was no-one left to plan the economy.

Or to put the point another way, 8 per cent of GDP would be a reasonable estimate for the total value to the UK economy of trading with EU countries — not the value of an EU trade deal, but the contribution to GDP of the trade itself. So to say that leaving the EU with no deal would cost 8 per cent of GDP in one year is to say that by leaving with no deal the UK would lose the entire value of trading with the EU as it has built up since pre-Roman times, all lost in one year. I would call that “not even wrong”, but I don’t feel that would nearly capture how absurd a claim that is.

Paul Krugman, no fan of Brexit, has said he worries that forecasts of this sort reflect “motivated reasoning” (politically correct speak for “bias”).

In fact, the Bank’s projection is even worse and even more implausible than I have made it sound, because not only does it have GDP contracting 8 per cent in one year, but there is no recovery phase. GDP just collapses by 8 per cent and then stays at a new lower level, growing no faster than if we had embraced May’s deal.
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Some have tried to defend the Bank publishing this absolutely ludicrous projection on the grounds that it was not what the Bank was forecasting what would happen, just a scenario. Well, obviously it’s not the Bank’s forecast, because it’s not the government’s policy to have no deal and it’s not the Bank’s job to say that the government’s policy will fail.

But it is what the Bank says might potentially happen in a disorderly no deal Brexit scenario in a document that states that its task is to analyse “the consequences of leaving the EU without a Withdrawal Agreement.” If the Bank’s defence is “When we put out a report saying that in a disorderly Brexit GDP might fall 8 per cent within a year we didn’t mean anyone to infer that if there were a disorderly Brexit GDP might fall 8 per cent in a year” then that’s even more ridiculous than its “forecast̶1;.

I suspect that most of the hyperventilating about the dangers of a no deal Brexit would prove in the event to be hot air. But it would not have been unreasonable for the Bank to include some extreme scenario forecasts for how bad things could get in a really bad case.

The nearest analogues from recent decades for a disastrously bad short-term impact from a disorderly no deal would, I suggest, be Heath’s “three day week” from January to March 1974 when electricity supplies ran low because of the miners’ strike, the Winter of Discontent of 1978/9, and the strikes, inflation and disorder of 1980. In 1974 GDP contracted by 2.5 per cent. In 1980 GDP contracted by 2 per cent.

In my view it would have been credible for the Bank of England to consider a range of scenarios for the first year of a no deal Brexit that included an extreme case of a 2.5 per cent contraction up to a case in which a no deal Brexit proved to have few effects and the world economy grew faster than expected, boosting UK GDP growth to 2.5 per cent – so a range from -2.5 to 2.5 per cent growth.

But an 8 per cent contraction in one year is not that. Some people have called the latest round of forecasts a “re-run of Project Fear”, referring to the Treasury’s forecast of a “year-long recession” following a vote to leave the EU — a recession that did not happen at all, even for one quarter, let alone last a year. But those Treasury forecasts, though exaggerated, over-hyped and in the event wrong, were at least within the realms of the kinds of things that happen when there is a recession in the UK. They were not for an 8 per cent contraction in GDP — the kind of thing that would require us to have a widespread famine or be invaded and occupied by a hostile power.


One final remark on this Bank of England “analysis̶1;. Near the start, it declares that the fundamental guiding assumption of the work is that Brexit will lead to the UK economy becoming less open over time in every scenario. That is despite the fact that advocates of Brexit and the UK government state that their intention is for the UK economy to become more open over the long term as a consequence of Brexit. This seems to me to be a wholly improper assumption to make in what purports to be an objective analysis.

Suppose, for example, that the Green Party had a stated policy of liberalising banking but someone at the Bank of England believed that, in practice, if it came to power the Green Party would probably seek to jail bankers. Then suppose the Bank produced what it claimed was an objective analysis of the impact of a Green Party government. Would it be proper for the Bank to make the central guiding principle of its analytical framework be the quantification of the impacts of jailing bankers? And if the Bank did do that, should we regard its analysis as an attempt at neutral technical analysis or, instead, a transparently political analysis dependent on controversial and disputed policy assumptions that ran flat against the stated policy of those it was analysing? I think we know the answer, and it’s the same when it comes to Brexit.

The UK economy is not going to contract 8 per cent in one year, regardless of how disorderly Brexit gets. For the Bank to say that might happen is not some speaking truth to power objectivity. It is absurd, nonsensical and incredible.

[pj fozzie] 29/11/2018 16:03

Porsche1945, as a knuckle dragger - I find myself in broad agreement with Tony Abbott, ex Australian PM:

"It’s pretty hard for Britain’s friends, here in Australia, to make sense of the mess that’s being made of Brexit. The referendum result was perhaps the biggest-ever vote of confidence in the United Kingdom, its past and its future. But the British establishment doesn’t seem to share that confidence and instead looks desperate to cut a deal, even if that means staying under the rule of Brussels. Looking at this from abroad, it’s baffling: the country that did the most to bring democracy into the modern world might yet throw away the chance to take charge of its own destiny.

Let’s get one thing straight: a negotiation that you’re not prepared to walk away from is not a negotiation — it’s surrender. It’s all give and no get. When David Cameron tried to renegotiate Britain’s EU membership, he was sent packing because Brussels judged (rightly) that he’d never actually back leaving. And since then, Brussels has made no real concessions to Theresa May because it judges (rightly, it seems) that she’s desperate for whatever deal she can get.

The EU’s palpable desire to punish Britain for leaving vindicates the Brexit project. Its position, now, is that there’s only one ‘deal’ on offer, whereby the UK retains all of the burdens of EU membership but with no say in setting the rules. The EU seems to think that Britain will go along with this because it’s terrified of no deal. Or, to put it another way, terrified of the prospect of its own independence.

But even after two years of fearmongering and vacillation, it’s not too late for robust leadership to deliver the Brexit that people voted for. It’s time for Britain to announce what it will do if the EU can’t make an acceptable offer by March 29 next year — and how it would handle no deal. Freed from EU rules, Britain would automatically revert to world trade, using rules agreed by the World Trade Organization. It works pretty well for Australia. So why on earth would it not work just as well for the world’s fifth-largest economy?

A world trade Brexit lets Britain set its own rules. It can say, right now, that it will not impose any tariff or quota on European produce and would recognise all EU product standards. That means no border controls for goods coming from Europe to Britain. You don’t need to negotiate this: just do it. If Europe knows what’s in its own best interests, it would fully reciprocate in order to maintain entirely free trade and full mutual recognition of standards right across Europe.

Next, the UK should declare that Europeans already living here should have the right to remain permanently — and, of course, become British citizens if they wish. This should be a unilateral offer. Again, you don’t need a deal. You don’t need Michel Barnier’s permission. If Europe knows what’s best for itself, it would likewise allow Britons to stay where they are.

Third, there should continue to be free movement of people from Europe into Britain — but with a few conditions. Only for work, not welfare. And with a foreign worker’s tax on the employer, to make sure anyone coming in would not be displacing British workers.

Fourth, no ‘divorce bill’ whatsoever should be paid to Brussels. The UK government would assume the EU’s property and liabilities in Britain, and the EU would assume Britain’s share of these in Europe. If Britain was getting its fair share, these would balance out; and if Britain wasn’t getting its fair share, it’s the EU that should be paying Britain.

Finally, there’s no need on Britain’s part for a hard border with Ireland. Britain wouldn’t be imposing tariffs on European goods, so there’s no money to collect. The UK has exactly the same product standards as the Republic, so let’s not pretend you need to check for problems we all know don’t exist. Some changes may be needed but technology allows for smart borders: there was never any need for a Cold War-style Checkpoint Charlie. Irish citizens, of course, have the right to live and work in the UK in an agreement that long predates EU membership.

Of course, the EU might not like this British leap for independence. It might hit out with tariffs and impose burdens on Britain as it does on the US — but WTO rules put a cap on any retaliatory action. The worst it can get? We’re talking levies of an average 4 or 5 per cent. Which would be more than offset by a post-Brexit devaluation of the pound (which would have the added bonus of making British goods more competitive everywhere).

UK officialdom assumes that a deal is vital, which is why so little thought has been put into how Britain might just walk away. Instead, officials have concocted lurid scenarios featuring runs on the pound, gridlock at ports, grounded aircraft, hoarding of medicines and flights of investment. It’s been the pre-referendum Project Fear campaign on steroids. And let’s not forget how employment, investment and economic growth ticked up after the referendum.

As a former prime minister of Australia and a lifelong friend of your country, I would say this: Britain has nothing to lose except the shackles that the EU imposes on it. After the courage shown by its citizens in the referendum, it would be a tragedy if political leaders go wobbly now. Britain’s future has always been global, rather than just with Europe. Like so many of Britain’s admirers, I want to see this great country seize this chance and make the most of it."

Tony Abbott served as Prime Minister of Australia from 2013 to 2015

Cheers, PJ

[porsche1945] 29/11/2018 15:20

Intu taking it all down, hope the knuckle draggers who voted for brexit are enjoying having a trashed currency,trashed asset values and a trip back to seventies style Labour politics, enjoy🤪

[yopf] 16/11/2018 08:57

Morgan Stanley cuts price target from 650 to 640 (10hrs ago)

[porsche1945] 15/11/2018 13:34

Oh dear. If no brexit deal or Corbyn in this down to sub a fiver, still too many shopping centres and London exodus to europe....not good.

[yopf] 15/11/2018 09:22

Closed and now looking at a possible reversal. Oversold on short term chart. Got tentative buy order in at 605.

[yopf] 15/11/2018 09:05

Target 608 then see where it goes from there

[yopf] 15/11/2018 08:56

I'm still in my short

[yopf] 14/11/2018 16:46

Nice trade off the overbought position:)