Broker snap: Broadgate sale more likely at British Land

18th Aug 2009 12:51

The first quarter update from British Land has left the market unimpressed and prompted broker KBC Peel Hunt to cool on the stock.'Valuation assumptions for the company's portfolio must be severely stretched to justify the current 495p share price,' the broker said. 'The 30% rise in real estate Leader stocks represents a resurgent interest in the sector following some return to realistic property yields and the emergence of a limited number of real estate companies with capital to deploy,' the broker argues, adding that it expects share prices in the sector to pull back in September and October.KBC Peel Hunt has downgraded its recommendation on British Land from 'buy' to 'hold' and suggests that hopes of a full bid from the consortium reportedly stalking the group may be misplaced.'While strange things can happen, especially during times of constrained capital, we believe it highly unlikely this [speculation] will result in an actual bid. More likely, any such consortium could take some or all of the Broadgate Estate, freeing up valuable balance sheet capacity for British Land and taking it some way towards a more comfortable debt position, even if property values fall further,' the broker said.