Liberty puts on a brave face

Johannesburg - The market has responded positively to dual-listed UK property group Liberty International, after it told investors it was seeing signs of stabilisation in the property market.

Once the darling of SA investors looking for access to key shopping centres and commercial property in the UK, Liberty International took a nosedive as asset values plummeted in recent years.

In its results announcement for the six months to end-June 2009, it said: "After a two-year period of exceptional turmoil, with the real estate downturn reaching its greatest intensity in the last quarter of 2008 and early months of 2009, we can, with some relief, report to shareholders welcome signs of at least a measure of stability, if not yet recovery, in property and economic market conditions."

Liberty said its net asset value per share fell from 1 095p in June 2008 to 448p this year. Net assets slipped from £4.1bn to £2.5bn, while the company reported a £452m loss.

Its debt to asset ratio was 56%, compared to 48% in the previous financial year.

Paul Theron of asset management firm Vestact said: "These results make for grim reading." He said Liberty has again lowered the valuation of its properties by £1bn during the last half-year period from £7bn to £6bn, following an earlier write-down from £8bn to £7bn.

A positive sign for Theron was that it seemed the company would keep its dividend payment policy. Liberty cautioned growth opportunities would remain scarce until the economic recovery takes hold.

In the services-driven UK market, the slowdown in sectors like banking and financial services has hit the market severely.

"The signs of stability, if not yet recovery, in property and economic conditions are welcome," Liberty said. "However, the scale of the public sector deficit and the measures required to bring government finances into reasonable balance are likely to represent a constraining factor on UK growth for some years to come."

A local analyst who declined to be named told Fin24.com he felt an interesting development in Liberty was its tentative steps into developing markets such as India and China.

"While it is a minute part of their business, it may be something to watch over the next few years," the analyst said.

In China, the group has invested £33m in a fund with Harvest Capital, while the second fund is being used to develop a new mall in Chongqing, expected to open by the end of 2010.

In India the company holds a 25% share in Prozone and 5% in the listed parent company, Provogue, which is valued at £29m.

In late afternoon trade on Friday, Liberty International stocks were up 1.9% (105c) at 5 734c per share.

- Fin24.com