|Bid||617.20 x 0|
|Ask||617.20 x 0|
|Day's range||611.40 - 626.40|
|52-week range||5.99 - 971.80|
|Beta (5Y monthly)||0.76|
|PE ratio (TTM)||30.78|
|Earnings date||11 Nov 2020|
|Forward dividend & yield||0.13 (2.04%)|
|Ex-dividend date||28 May 2020|
|1y target est||704.21|
(Bloomberg Opinion) -- Corporate bean counters must be tempted to slash office space as work-from-home advice resumes where Covid cases are surging. But succumbing will mean consequences for recruitment. It’s easy to forget that offices are a retention tool, and will remain so.Everyone knows employers have incentives to pull people back to their desks. Offices facilitate free-flowing ideas and business leads, cultural cohesion and the seamless transfer of savoir-faire from senior employees to their juniors. And many employees want to return. Anecdotally, recent brief spells in semi-empty buildings have given a boost to some financial workers for any number of reasons: The clearer separation of professional obligations from personal life, the easing of pressure on relationships unaccustomed to one or both partners homeworking 24/7.Just as before the pandemic, employees’ demands for flexibility are likely to include access to a pleasant office. Imagine a firm that decides to maintain its existing floor space despite partial homeworking, and allows every employee to have their own desk. With the office, say, two-thirds full, the square-foot-per-person-ratio shoots up to levels that would have been deemed profligate pre-Covid. But the staff like having their cake and eating it, and staff turnover falls.Meanwhile, a rival firm shaves the rent bill by signing a lease for one-third less space and making everyone “hot desk” — employees with early morning duties like childcare always end up with the rubbish seat. Which of the two companies finds it easier to recruit?Analysts at UBS Group AG point out that hot-desking risks being a false economy. Citing research by property group Great Portland Estates Plc, they estimate rental costs are equivalent to 5-10% of a typical London business’s revenue. Assuming salary costs account for around half, they ask: “Will management risk ‘100’ in revenue, and force the ‘50’ (i.e. employees) to desk share in order to save a percentage of the ‘5-10’?”For commercial property investors, the impact of increased homeworking will probably be mitigated by the need for less densely packed offices as long as the novel coronavirus remains a public-health threat. The most significant driver of demand is likely to remain employment, not working habits.If the analysis is right, it’s supportive of the London office market. The city already packs people in more tightly than most other financial centers, with only 9.5 square meters per desk versus 10.4 in New York, says UBS citing Cushman & Wakefield data. That may need to reverse. London’s vacancy rate is also low versus the U.S. financial capital, implying less slack.KKR & Co. sees value in the city — it recently took a 5% stake in Great Portland Estates. The low valuation of U.K.-listed office operator Derwent London Plc makes sense only if you believe its average rents will fall to less than one-third of what prevails at the top end of the U.K. capital’s prime West End district, UBS reckons. That’s a huge margin for error. The stock market is behaving as if Zoom and Microsoft Teams have destroyed the competitive advantage of an airy office. That doesn't compute.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- KKR & Co. has bought a stake in London developer Great Portland Estates Plc, betting against the demise of the downtown office.The private equity company has acquired a 5.35% stake in the landlord, according to a filing, becoming the latest of several money managers to build stakes in U.K. real estate companies during the Covid-19 pandemic. Great Portland, which owns and develops mainly office buildings in central London, has fallen more than 30% this year as restrictions to contain the virus triggered a severe recession and raised questions about the long-term outlook for urban workspace.Spokesmen for KKR and Great Portland declined to comment. Great Portland gained as much as 7% in London on Monday, the most since April.Real estate stocks have been among those hit hardest hit by the virus fallout as tenants struggle to pay rent, retail spending shifts online and office workers do their jobs from home. That’s lured buyout firms attracted by deep discounts between the value of landlords’ assets and their market capitalizations. Brookfield Asset Management bought a stake in rival landlord British Land Co. in June and upped its holding earlier this month.KKR’s stake, acquired for about 74.3 million pounds ($94.7 million) based on Wednesday’s closing price, makes it the sixth-largest holder of Great Portland, according to data compiled by Bloomberg. The London-based company is now valued at about 1.5 billion pounds.While private equity firms have raised vast real estate funds targeting distressed deals, the impact of the coronavirus has yet to translate into widespread defaults and forced sellers. That’s further encouraging the managers to deploy capital on shares and bonds in companies that have strong track records but which have been badly affected by negative sentiment due to the virus.Great Portland has sold off completed buildings at high prices in the past five years and reduced its debt to about 15% of the value of its properties, a level that’s among the lowest in the business. The company has cash and undrawn loans of about 390 million pounds.According to a July 10 trading update, it had collected 69% of the rent due in June and 82% of what was owed in March, with stores and restaurants that occupy the ground floors of its mainly West End office buildings particularly hard hit.(Updates with share move in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The latest analyst coverage could presage a bad day for Great Portland Estates Plc (LON:GPOR), with the analysts...