Time is right for Broadgate stake sale

David Hellier
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ING symbolised the post Big Bang world in the City more than the development of the Broadgate complex near Liverpool Street and Moorgate in the 1980s.<br /><br />The ice rink and the gleaming buildings fitted out for the likes of Shearson Lehman and SGWarburg were the focal point for the new City, before even the first skyscrapers in Canary Wharf were erected.<br /><br />Out were the likes of quaint old City institutions like Rowe &amp; Pitman and Smith New Court, to be subsumed eventually by the likes of Merrill Lynch and UBS as the new rules brought foreign capital into the City.<br /><br />British Land, then under the auspices of the legendary Sir John Ritblat, did not develop the site but took an initial stake in 1982 before taking full control some years later.<br /><br />Now, with the City in a trough, and with some of the Broadgate offices in need of something more substantial than a fresh lick of paint , it looks as if British Land, under new chief executive Chris Griggs, is about to sell a 50 per cent stake in the project.<br /><br />There was no confirmation of a rumoured &pound;150m deal with US private equity group Blackstone at the group&rsquo;s results yesterday, but the mood music suggests a deal is probably not far away.<br /><br />Since being at the helm for the past eight months Griggs has brought the company&rsquo;s debts down from &pound;5bn to just over &pound;3bn through a combination of asset sales and a rights issue.<br /><br />Conventional wisdom might suggest there&rsquo;s little sense in selling a large stake in an asset in the middle of a downturn unless one has to.<br /><br />But City analysts yesterday were pretty relaxed about the idea. Evolution&rsquo;s Alan Carter, for example, says: &ldquo;In the past British Land&rsquo;s portfolio has been dominated by its ownership of Broadgate and Meadowhall (its huge retail complex in Sheffield in which it recently sold a 50 per cent stake).<br /><br />&ldquo;They&rsquo;re each too large an asset in terms of exposure to certain types of market.<br /><br />&ldquo;And with Broadgate, maybe this is the only time they can sell it and then over the next couple of years the group can start buying some assets again and take advantage of some distressed situations.&rdquo;<br /><br />Knight Frank partner Nick Braybrook says such prime London sites &ldquo;have fantastic investor appeal.&rdquo;<br /><br /><strong>FARE&rsquo;S FAIR</strong><br />One of the happy consequences of yesterday&rsquo;s inflation figures is that 60 per cent of regulated train fares will be coming down from the beginning of the year.<br /><br />The average reduction in ticket prices is only likely to be 0.4 per cent, so perhaps there&rsquo;s little cause to pop the champagne corks just yet.<br /><br />How will the fare reductions affect revenues? My guess is that the publicity about lower fares will be so widespread &ndash; because the reductions go right across the industry &ndash; that passenger numbers will rise.<br /><br />Travelling by train makes sense. It&rsquo;s green, it&rsquo;s occasionally pleasant even and on most lines it&rsquo;s a speedy and efficient way to get around. <br />Let&rsquo;s hope the fears over public spending don&rsquo;t result in Crossrail being canned.<br /><br />david.hellier@cityam.com<br /><br /><strong>&bull; Allister Heath is away</strong>