Strong trading keeps Savills on top of share league

Savills and Capital & Regional are the best-performing property shares this year, according to Property Week’s Property Share Performance League.

Buoyed by strong financial results and good investor interest, Savills’ shares jumped 37% and Capital & Regional went up by 33% in the first half of the year.

Savills was the number one property share last year and is on course to repeat the performance this year. The property services company benefited from a set of better-than-expected results for 2003 with a 73% rise in pretax profits to £35.3m and a record bonus pool of £54m.

Shares in Capital & Regional, led by Martin Barber, have soared since it transformed itself from a traditional landowner into a co-investing fund manager, like Pillar Property. At the end of March it revealed a bumper set of 2003 results, with net asset value rising by 33% to 521p a share.

The number one and three spots in the Property Share Performance League table were held by companies that benefited entirely from takeover bids, and which are not likely to remain in the quoted sector for long.

Estates & General, the M25 office specialist, rose 41% to 253p after it agreed to a £70.7m takeover by Leo Noé in May. The company is about to lose its stock market listing.

Property Acquisition & Management is the subject of a takeover bid by David Kirch, who controls 43% of the split capital investment trust’s voting rights. But PAM has dismissed his offer as undervaluing the company.

The quoted property sector as a whole performed well in the first half of the year. The average share price rise was 14%, compared with the 1% increase in the All-Share Index.

Of the majors, British Land was the star performer, up 19% from 584p to 693.5p. Land Securities was close behind, rising 17% to 1159p.

Slough Estates was the worst of the majors, up just 2% to 448.75p. It has suffered from a poor set of annual results, which revealed a 3% drop in NAV, largely because of writedowns of three development sites.

Only six of the 49 quoted property companies underperformed the stock market. Grainger Trust was the biggest of the six, suffering from the poor sentiment towards the housing sector.

The worst performer was tiny Hampton Trust, whose shares were trading at just 1.75p at the end of June.

The quoted property sector shrunk in the first half of the year. Canary Wharf was taken private for £1.7bn by a Morgan Stanley-led consortium and Elliot Bernerd carried out a £895.5m management buyout of Chelsfield.

n The newly launched Insight Foundation Property Trust got off to a strong stock market debut last Thursday.

The trust, set up by Halifax Bank of Scotland’s fund management arm Insight Investment, ended last week at 105.5p, a rise of 5.5% on its 100p listing price in the investment companies sector. It is the largest listed property fund, with a market capitalisation of £274m. The trust raised £260m of equity, but could have taken nearly £400m because it was heavily oversubscribed. Its portfolio size is £293m with a target of £400m.

In the Real Estate Index, shares continued to perform strongly, rising 1.7% to 2850, while the All-Share dropped 1% to 2165. Slough was the best performing major, up 3% to 460.5p. St Modwen Properties (+8% to 305p) and Unite (+8.5% to 217.5p) were the top performers apart from Minerva (+26% to 310p), which put itself up for sale.