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EGTV talks to chief executive of British Land Chris Grigg, Lloyds Banking Group's Richard Dakin, Hammerson chief executive David Atkins and JP Morgan Cazenove head of real estate Robert Fowlds about their views for property's future.

Speaking from the EG Investment Summit at the King's Fund in London today, the four outline the future of their companies, investment in the sector, and which markets are attractive - or not - to investors and developers in the current economic climate.

This past weekend, media have picked up on stories published in early June (see our EGi article) stating that Canary Wharf Group looks set to partner Land Securities at its Walkie Talkie office building in the City.
While that piece of information is nothing new, analysts at JPMorgan Cazenove say it now looks like the deal is more certain.
Canary Wharf Group - which is 69% owned by Songbird - will provide construction services to the project, according to reports.
"We would see such a potential JV as a positive for both Land Securities and Songbird," said JPMorgan.
"The main positive for Land Securities being that it could start another (speculative) office project with an experienced JV partner.
"As we said before, Land Securities is gearing up its development pipeline and putting money where its view is (which we welcome)."
What does seem new from these reports is that China Investment Corporation has approached Land Secs to take a 25% stake in the Walkie Talkie - see article here.
"We already note that CIC has an indirect stake in the building as it holds around 15% of Songbird," said JPMorgan.
"We hope Land Securities does not lower its stake below 50%, although everything has its price."

Analysts agree that today's announcement from Minerva setting a date for an EGM and disclosing debt details is a good step forward.

The date of the EGM has now been set for 8 September. 

Majority shareholder KiFin, the investment vehicle of South African investor Nathan Kirsch which owns 29.9% of Minerva, last month called for an extraordinary meeting to vote on its proposals for the removal of chief executive Salmaan Hasan and chairman Oliver Whitehead. It also called for additional disclosure regarding the refinancing of its debt that Minerva completed last year.

In its analysis of today's announcement, broker JPMorgan Cazenove says it doesn't buy KiFin's claims that it does not want to take over Minerva.

Here's what they say: "Minerva announces General Meeting to vote on KiFin resolutions: Minerva has released a statement announcing a General Meeting on 8-Sept and additional disclosure relating to financing and the Lancaster Gate profit share - we take away the following: 1) Minerva's main argument appears to be that KiFin wants control of the company; based on history (the 50p bid last year and attempted removal of CEO and Chairman) this looks to be the case, although KiFin has stressed several times it is not interested in control; 2) We welcome the increased disclosure, although we believe these details could have been provided at an earlier stage. Overall conclusion, in the interests of shareholders we believe this issue needs to be resolved.

The Control Resolutions, include the removal of Oliver Whitehead as Chairman and Salmaan Hasan as Chief Exec and the appointment of two KiFin nominees. Minerva argues that the replacement of the Chairman and Chief Exec with KiFin representatives "would be a significant step towards KiFin gaining effective control of the company."

The Disclosure Resolution relates to information KiFin feels should be provided to all shareholders, including changes to the security package to the company's lending banks and the profit share with Northacre. This morning Minerva disclosed additional information: *Additional security has been agreed: for future interest payments and certain financing costs in respect of The Walbrook and St Botolphs in the form of capped charges on Minerva's share of future dividends from Lancaster Gate and a similar capped charge at Westerhill Road in Scotland. The board estimates the maximum liability secured by the additional security equates to £37m, *Exit Fees due when loans are fully repaid, 1.35% capped charge on the £275m total facility at the Walbrook and at St Botolphs there is a 10% max fee (and £0.5m min fee) on the net profit of the development after settling all outstanding obligations of the borrower.*Leasing Milestones, requires the leasing of less than two thirds of space at the respective buildings by the end of the 2012 financial year.*Lancaster Gate Profit Share, Minerva earn profits based on the following sliding scale: profit up to 10% of project costs: 95%, profits between 10-15% of project costs: 80%, profits between 15-20% of project costs: 60%, profits above 20% of project costs: 50%."

British Land continued to warn the near-term prospects for the property sector were uncertain in the quarter to 30 June.

The UK's second largest REIT said that its portfolio had risen 1.4% to £8.7bn, compared with a 16% rise in the previous two quarters.

JPMorgan Cazenove analysts say BL's results were in line with expectations and confirm the trend of slowing capital growth.

"We see three key points in these results: (1) Q1 results were in line with our expectations: Adj NAV of 515p vs. JPMCe 520p and operating performance strong with occupancy up from 97% to 97.8% and like-for-like income up by 1.9%, (2) Property values rose by 1.4% over the quarter (vs. JPMCe 1.7%), which confirms our forecasts of slowing capital growth and risk of (small) dip in values (reflected in our Mar-11e Adj NAV of 513p). We see a risk that this will result in some profit taking today given the recent bounce in property stocks, and (3) However, any significant (sector) retreat should be viewed as a buying opportunity in our view, because of British Land's 12.5 years lease length (particularly due to the recent fall in bond yields; UK 10y 3.26%) and favorable sector exposure," said analyst Harm Meijer.

FTSE 100 REIT Hammerson this morning reported strong results for the six months to 30 June.

The company, which has retail and office assets in the UK and France, said that adjusted profit before tax - which strips out the effects of valuation movements - was £70.2m, a 7% rise on the same period last year.

Hammerson chief executive David Atkins spoke with Estates Gazette finance editor Mike Phillips about today's results.

St Modwen and Persimmon have entered into a joint venture to develop 2,000 homes on seven sites owned by St Modwen with an end value of £300m.
The development across 120 acres of land is expected to take up to five years to complete.
Today, JPMorgan Cazenove has offered its thoughts on the venture.
Analyst Osmaan Malik says: "Assuming a 20% profit margin, we estimate St Modwen's profit share would be around £30m or 15p per share.
"Overall, we see the JV creation as positive for St Modwen, as it confirms the land values in its books (and hence its recent published NAV of 214p) and house builders' appetite for its schemes.
"We continue to see value in the stock and reiterate our OW rating."

Analysts at JPMorgan Cazenove are expecting a "sharp slowdown" in capital growth following Great Portland's interim management statement late last week.
In a note analysing the company's news, JPMorgan said it expects any further gains to come from rental growth, not yield shift, and say Great Portland's own outlook is for a "less urgent mood" to persist over the remainder of the year.
The broker said Great Portland's IMS was "bang in line with our expectations" with NAV of 295p compared with its expectations of 296p, driven by 4.6% capital growth in the quarter.

Following the company's conference call with analysts, JPMorgan came back with these points:

European property stocks have returned -3% so far this year, and UK stocks even worse at -10%.
A couple of the brokers have been searching the sector for key picks that will bring outperformance going forward.
JPMorgan Cazenove's Harm Meijer and Osmaan Malik say there are clear hot spots within European property - London West End offices, which have returned 2%, and Switzerland, 11%.
On the other side of the coin, the worst performers have included UK smallcaps (-17%), Southern Europe (-25%), and continental retail (-12%).
JPMorgan has looked at its list of property stocks that it analyses to find the "new gold" in the sector.

"While we believe the deleveraging will take time, we identify a number of attractive (long-term) propositions," says Meijer.

Capital Shopping Centres has today announced a $600m share deal, offloading its US subsidiary Capital and Counties USA.
US property group Equity One will buy the company in a joint venture agreement.
Evolution Securities analyst Paul Pulze has given his take on the transaction saying it had been anticipated by the market since the start of this year.

He says:
EVO TAKE - The transaction has been anticipated by the market since early this year and the completion of a transaction comes as no surprise. We are interested by management's comments of retaining a stake to be able to "participate in the significant growth potential" as we had expected a complete disposal of the assets. As the assets represented only around 8% of the CSC pro-forma portfolio at end-December, we do not expect a material impact on the company.
DETAILS - CSC has completed a transaction with Equity One, a US REIT, to enter a JV which will acquire CSC's US subsidiary. CSC will receive 4.1m shares in Equity One and a further 10.9m JV units. CSC may redeem its JV units for cash or Equity One stock (on a one-for-one basis) at the option of Equity One. Equity One's closing price was $17.22, which reflects a transaction value of $70.6m of initial Equity One stock and a further $187.7m for the JV stake at the current price.
VALUATION AND RECOMMENDATION - The shares trade at 19% discount to our Dec-10E NAV and provide a 4.8% dividend yield. We maintain our Reduce rating on the shares

British Land has apparently been surprised by the level of interest it has received from potential tenants for space in its proposed Leadenhall (or Cheesegrater) development in the City of London.
The company said earlier this week it was considering restarting the 610,000 sq ft development and that it was in talks with potential joint venture partners and tenants to examine the viability of completing the development.
And another of British Land's counterparts to report this week, Land Securities, says it expects to build the Walkie Talkie building, at 20 Fenchurch St, speculatively, but it is also seeking a jv partner.
These are some of the takeaways from the briefings given to analysts at the companies results meetings this week.
JP Morgan Cazenove analyst Harm Meijer has jotted down some of his thoughts on the Q&A session.
He says:

Feedback analyst meeting British Land: * Company pleasantly surprised with tenant interest for potential office development Leadenhall. It is also talking to 1 / 2 parties for sharing the risk, * Management expects to increase exposure to West End offices and believes this exposure will be higher than its weighting to City offices (over time), * Management sees Mayfair rents easily rising to £80-£90 psf, * On distressed sales: there is more product coming to the market but it is generally not of great quality, * British Land expects a yield of around 7% on its office developments, * On the balance sheet: its Loan-To-Value ratio is currently 47% and it sees a maximum LTV of 55%. Property values need to fall by more than 44% before loan covenants are breached, * Our observation: CEO Chris Grigg was smiling all the way through the presentation and, of course, president Sir John Ritblat was there.