THREE times in nine months, Hungarian-born financier George Soros has
made a major impact on the British financial scene.
Last September, his top-performing $5800m Quantum Fund made around
#650m on selling sterling short and so was a significant influence
behind Britain leaving the ERM.
At one point he had sold $10 billion of sterling forward in the
certainty he could cover his position at a lower price and this, and
some major stock market and bond operations, generated overall profits
of around #1300m.
In April, he teamed up with billionaire financier Sir James Goldsmith
and gave the gold market a major upwards shove.
And yesterday he joined up with John Ritblat's British Land to set up
a jointly-owned #500m venture, British Land Quantum Property Partnership
(BLQ), to exploit the current depressed state of the property market.
Paradoxically, this move contradicts what he said only a fortnight ago
when he said that the investor should forget about Britain and Germany
and instead look to Italy.
The immediate effect upon the sector was dramatic with British Land
shares soaring 46p to 344p despite there also being a #132m rights issue
to help finance the deal.
Other leaders also gained ground with industry giant Land Securities
up 30p to 583p, and MEPC, whose interim results are due this morning,
ahead 26p at 448p.
The money will be invested in British properties, some of which will
be ''very, very big.'' It is impossible that there could be takeovers of
existing property companies.
The timing is almost perfect with the market now looking as if it is
turning as far as prime properties are concerned. These are generally
rated as being those with first-class tenants' leases of at least 15
years without a break.
However, there could well now be too much money chasing good
properties with all the major companies except MEPC having tapped the
market for fresh funds this year -- Land Securities, Slough Estates,
Brixton Estates and Hammerson.
But it is clear that BLQ will be chasing the very major prospects,
possibly even including Canary Wharf, where it would have little
competition with effectively only Land Securities having the firepower
among the British companies to compete -- although there could be
significant interest from Germany.
The terms of the rights are four new shares at 245p for every 17 held.
Also Quantum is acquiring 11,300,000 new shares at 298p, equivalent to
4.8% of the British Land equity, to raise #33.7m which will be injected
into BLQ.
British Land increased pre-tax profits last year by 4% to #34.6m. But
more significantly, net asset value eased only 6% to 307p per share with
the overseas assets almost unchanged and the damage being at its worst
with the general office portfolio in London, apart from the City, and
south-east England.
The dividend total has been raised 10.2% to 7p with a 4.72p final.
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