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The Markets
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The Markets
by Proactive
Proactive UK has moved.
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The Markets
by Proactive
Proactive UK has moved.
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Go to Proactive UK

Real Estate

WEEK AHEAD: Property stocks in focus after EU vote

British Land is tipped to report a hit from the UK vote to leave the EU

The impact of the result of the EU referendum on property stocks will be among the issues in focus during a busy week ahead.

British Land PLC (LON:BLND) is tipped to report a hit from the UK vote to leave the EU when it updates the market on trading on Monday.

The share price of the company, considered by analysts to carry more risk than some rivals, has fallen by a fifth after the referendum.

Numis Securities said the company, which is redeveloping the 100 Liverpool Street site in London, will now have to decide whether to go ahead with that project in the wake of the vote.

Numis expects the company to postpone the scheme in the absence of a pre-let.

The broker added in a note: "In the wider portfolio rental, growth is looking harder to come by, negative yield trends from trading in illiquid, larger lot sizes could impact valuations and uncertainty now clouds the outlook for longer-term value creation in Canada Water.

"British Land is a different proposition than it was a month ago."

Meanwhile, rival Land Securities PLC (LON:LAND) reports on trading on Thursday. Analysts say the company has protected itself against a 'Brexit' impact by halting further speculative developments.

But they say it is difficult to see what actions management can now take to insulate against decreases in asset valuations.

Negative yield trends could badly hit the company, with its large average lot sizes across its portfolio, if valuations of assets in the less liquid end of the market go negative.

That could happen if gated property funds sell down assets at a discount to BV.

The referendum outcome is also likely to be a factor considered by investors when easyJet PLC (LON:EZJ) issues a trading update on Thursday.

EasyJet warned on profits last month due to third quarter disruption from strikes and other issues, currency and fuel price volatility and concerns about consumer demand following the EU vote.

Numis Securities reduced its 2016 pre-tax profit forecast from £716mln to £612mln.

The broker's Wyn Ellis said: "Roughly four weeks on, it will be interesting to see what impact Brexit has actually had on bookings at a vital time of the year and whether there is any further change to guidance.

"The very substantial fall in the share price (-25% as we write) post-Brexit suggests that the stock market anticipates a disappointing third quarter update."

But Numis added: "We continue to believe structural growth opportunities remain attractive."

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