Standard Life sells property holdings

Bloomberg

The Edinburgh-based company may invest as much as another 100 million pounds ($142 million) in stocks, Andrew Jackson, head of property strategy, said in a Feb. 27 interview. Land Securities Group Plc, British Land Co. and Hammerson Plc plan to raise 2.1 billion pounds to avoid breaching loan agreements.

"We think rights offers will be the catalyst for a rally in the U.K.," said Jackson, who expects the advance to start by the end of June. "We will be putting the money in a number ofmarkets including the U.S., where we have been terribly underweight, and support some of the rights issues in the U.K."

Property has slumped 38 percent since reaching a record in June 2007 compared with a 77 percent plunge in the FTSE All-Share Real Estate Index, which peaked in January that year. Investors such as Standard Life expect to benefit from that disparity. The company owns 9 billion pounds of property and 600 million pounds of shares in developers and real estate investment trusts. "REITs are crazy cheap," said Jackson. The only U.K. REITs Standard Life Investments holds in its Select Property Fund are Hammerson and Great Portland Estates, which specializes in properties in London’s West End.

There will be a "huge divergence" in the performance of REITs as they try to recover from the recession, he said. "Property is starved of capital."