US mall giant Simon Property Group reported second quarter results on Tuesday that included a $141m charge due to the fall in value of its 6.5% stake in UK shopping centre REIT Liberty International.
Not really unexpected, seeing how UK property shares have performed this year. Of more interest are the comments made by chief executive David Simon in the post-results analyst conference, which made their way back to the UK via JP Morgan Property analyst Harm Meijer. Simon hints that a tie-up between the companies is likely, even it is not the straight takeover deal that the market anticipated last year.
"We're not giving up hope. ... We're just going to see how that evolves," he said, adding that he believes that there are elements where Simon might be able to add to what Liberty does. The worst thing for it would be to try to recoup its investment in a "not-so-intelligent way."
The JP Morgan view?
Our US real estate team believes that Liberty Intl. is not an 'idle' investment for Simon Property and notes that its management is optimistic about recovering its investment over time. We continue to believe that Simon Property is Liberty International's preferred partner (not Westfield) and regard the chance high that both parties will start to work closer together.
As the news started to filter back to Blighty this morning, Liberty shares were up 3.7% at 459p.