Tonight:
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There was no shortage of punters pulling their chequebooks out when veteran property entrepreneurs Raymond Mould, Patrick Vaughan and Humphrey Price came calling.
The trio, best-known for selling Pillar to British Land for £811 million a few years ago, have just raised £225 million in fresh funds so that their latest vehicle, London & Stamford Property, can beat rivals to the heavily discounted commercial property that is flooding the market.
LSP chairman Mould said the placing had been “heavily oversubscribed” and word in the City today was that demand for the shares, at an 11.6% discount at 105p, exceeded the offering four times over.
Mould is now hoping to move LSP, which floated on AIM less than two years ago, up to the main market, possibly early next year, and convert it into a Reit (real estate investment company).
The strength of LSP, down 1p at 115p, is its founders' long track record. Before Pillar, the team were into business parks development, founding and then selling Arlington Securities to British Aerospace for £278 million in 1989. This is the third time in 40 years that Mould & Co have called the market correctly. LSP has bought £750 million of real-estate assets since floating, including a 50% stake in Sheffield's Meadowhall shopping centre.
At the end of a miserable week for the FTSE 100, which saw it threatening 4000, the index of leading shares was on the slide again, off 7.23 points at 4151.43, dragged down by miners and oil producers.
The latest US statistics painted a mixed picture on the other side of the pond. The US trade gap unexpectedly narrowed to $26 billion in May, the smallest amount since November 1999. Exports rose by 1.6% while imports fell by 0.6%. While in theory this should be read as positive, the drop in imports reflects continued weakness in domestic appetite. The Dow Jones, buffeted by a profits warning from Chevron, was down 7.03 points to 8176.14.
Financial Times publisher Pearson was one of the better performers, up 4p at 591p, after analysts at Credit Suisse said it was too cheap. CS lifted its recommendation to outperform from neutral, arguing that the 18% plunge in the share price over the past three months is overdone.
Pearson has been punished along with other media groups, possibly unfairly. It is now changing hands well below its historical trading range even though it is expected to perform well through the first-half reporting season. CS has raised its target price for Pearson to 680p from 630p.
City pessimists are convinced the FTSE has broken out of its trading range and say it is but a matter of time before it hits 4000. While this week's tumble adds weight to their argument it is not difficult to find counterviews.
A bullish note from Cazenove sounded a resolutely cheerful note. Caz reckons the FTSE is trading “well below the bottom of the potential trading range” identified by its arithmetic.
It says 4500 to 5500 is about right. It sees “considerable upside” in cyclicals and defensives and says some sectors, namely telecoms, tobacco and utilities and retailers, housebuilders and oil producers could move about 20% higher. It says current prices envisage almost no improvement in profits, yet the general feeling is that profits will go up by about 20% over the next two to three years.
Retailers enjoyed a strong session, helped by favourable trading figures from John Lewis.
Next took top spot, up 23p at 1592p, with strong showings for Home Retail and Kingfisher, 2p better at 188.6p.
Pali International analyst Nick Bubb said last night's meeting with a confident Kingfisher management had left him “convinced” of more profit upside than is envisaged in the forecasts.
The second quarter appears to be going well and Poland and China are secure future profit streams. Bubb is raising his profit forecast by 5% to £420 million this year and thinks Kingfisher is well within sight of the 19.6p target for earnings per share in the incentive plan laid out when Ian Cheshire became CEO 18 months ago.
Home Retail rose 8.5p to 275p on the back of a broker upgrade by Citigroup from hold to buy.
