With the FTSE 100 hitting a 14-year high recently and much being written by City watchers about where the index will end up this year, I thought it would be interesting to see how property stocks with roots in the North West were performing lately.
Intu, owner of the Trafford Centre, co-owner of the Arndale and a major interest of Peel chairman John Whittaker, will this month rejoin the FTSE 100 list of top shares, after being demoted 12 months ago. The promotion follows the bolstering of Intu's portfolio by two more shopping centres, largely funded by a £500m rights issue in March 2014. The shares closed on Friday 6 June at a new high of 328p – taking into account the new shares – compared to 347p in October 2013 before the issue. The consensus from analysts is to hold the stock, which has an attractive forecast yield of 4.3%.
Morgan Sindall is the diverse group that includes fit-out firm Overbury, developer Muse, social housebuilder Lovell, and the eponymous contractor and civil engineer.
As with other stocks, not surprisingly the Morgan Sindall share price is close to a 12-month high, as is the overall exchange. Morgan Sindall shares closed on Friday on 832p, compared to a 12-month high of 845p and a low of 565p, some 44% below. The group appears to have overcome boardroom squabbles and restructuring in the past year. One analyst has even put a £10 target on the share price. However, of five analysts' reports recently on Morgan Sindall, two said buy, two were recommending sell and three advised hold.
This reflects the ongoing confusion in the market over whether to celebrate construction's apparent resurgence or to avoid property as it's a volatile sector that will never be worth the same attention from investors again.
GP landlord Assura, based in Warrington, is at a 12-month high of 43p. Analyst Liberium Capital thinks it can hit 47p. Assura is one of the tax-efficient real estate investment trusts on the exchange, as is Intu. Assura has shaken off diversification – it used to run chemists – and costly interest rate swap issues to focus on the profitable healthcare property development and investment core business.
Combined, the prices of the 18 North West property related stocks I follow for news have risen by 35% in the past 12 months. This compares with +7% for the FTSE 100 and +8% for the FTSE All-Share index.
This suggests property and construction stocks are being sharply revalued after investors fled for supposedly safer ground in the downturn and now realise they're not such basket cases after all. Good.