MARKET REPORT: Dealmaking appears to be returning to property sector as investors look to bag a bargain during market slump

Dealmaking appears to be returning to the property sector as investors look to bag a bargain during the market slump. 

Shares in shopping centre owner British Land climbed 2.5 per cent, or 10.1p, to 407.3p after Canadian investment firm Brookfield Asset Management snapped up a 7.3 per cent stake. 

Traders also welcomed the news that Covent Garden landlord Capital & Counties (Capco) is eyeing a hefty stake in rival Shaftesbury.  

Brookfield swooped on a roughly £275m share of British Land days after the UK landlord reported the upheaval in the retail sector – exacerbated by coronavirus – had wiped more than £1 billion off the value of its property empire. 

The FTSE 100-listed group, whose sites include Broadgate in the Square Mile and the Meadowhall shopping centre in Sheffield, racked up a £1.1 billion loss. 

Brookfield's stake, revealed in a stock market filing, will no doubt spark speculation that a takeover could be on the cards. It was previously involved in an approach on another shopping centre owner, Intu Properties (down 18.6 per cent, or 1.16p, to 5.09p). 

On the FTSE250 index, traders digested the news that Capco is in talks to buy Hong Kong billionaire Samuel Tak Lee's 26.3 per cent holding in the West End property owner, which has a sprawling £4 billion estate across Chinatown, Carnaby Street and Fitzrovia. It confirmed the discussions in an update released after the market had closed on Thursday following press reports. 

Capco's potential swoop – it has stressed that there is no guarantee the pair will strike an agreement – comes after it boosted its coffers by selling a site in Earls Court for £425m in November.

Although there is no talk of a merger or takeover yet, the move is also bound to prompt chatter that one could be on the cards. Shaftesbury shares added 4 per cent, or 24p, to 627p yesterday, while Capco's advanced 2.6 per cent, or 4.2p, to 163.5p.

Elsewhere on the mid-cap index, retailer B&M reported a boost in sales in the eight weeks to May 23 as Britons turned to gardening and DIY during lockdown. It saw like-for-like sales rise 22.7 per cent at the stores it kept open during the restricted trading. 

Stripping out the spike in home and garden goods, sales rose 10.3 per cent, while in the quarter to March 28 revenues rose 6.6 per cent. Its stock rose 5.5 per cent, or 20.3p, to 389.7p. 

But the wider FTSE250 dropped into the red, falling 1.7 per cent, or 295.52 points, to 17042.96. 

The FTSE100 also fell 2.3 per cent, or 142.19 points, to 6076.6, as investors chose to bank gains made in a shorter but buoyant trading week. 

Profit-takers moved on Easyjet (down 8.1 per cent, or 60p, to 680p) and cruise operator Carnival (down 10.7 per cent, or 126.5p, to 1057.5p) as the pair looked more and more likely to drop out of the Footsie at next week's reshuffle, despite a recent sharp rally in travel stocks. 

Paddy Power Betfair-owner Flutter Entertainment dropped 3 per cent, or 320p, to 10280p after it raised around £812m by selling 8m new shares. Among the small-caps, law firm DWF tumbled 17.9 per cent, or 14.5p, to 66.6p following a boardroom coup that ousted chief executive Andrew Leaitherland, who will be replaced by chairman Sir Nigel Knowles. 

Over at building materials provider SIG, new chief executive Steve Francis has made the unusual move of bringing in venture capitalist group Clayton, Dubilier & Rice, who will invest up to £85m into the business in return for taking a 25 per cent stake. 

Shares in the business rose 4.3 per cent, or 1.2p, to 29.2p as the group reported revenue fell 9 per cent to £2.1 billion last year and. It swung to a loss of £112.7m.