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Investing.com -- Shares of British Land (LSE:LON:BLND) fell 1.5% after the company announced the sale of a 50% stake in Broadgate REIT, which is developing the 2 Finsbury Avenue scheme in London.
The stake was sold to Modon, an Abu Dhabi-listed developer, leaving British Land and GIC each with a 25% interest.
The transaction involves the 2 Finsbury Avenue (2FA) office development, a significant project in the City of London, which is currently 33% pre-let to Citadel, with options to increase this to 50%. The completion of 2FA is projected for 2027, with British Land continuing as the developer and asset manager for the project.
Despite the stock's decline, analysts see the disposal in a positive light. Bernstein analysts commented on the deal, stating,
"British Land’s (BL) announced disposal of 50% of Finsbury Avenue at a c.10% premium to book value is not only positive for the company but also a positive read-across for the wider London office market. The disposal should also help alleviate recent investor concerns of a potential double-dip in London office values in 2025."
The sale appears to be a strategic move for British Land, allowing the company to realize a profit on the development while still maintaining a significant stake and management control. Additionally, the deal with Modon brings a new international partner into the Broadgate estate, potentially adding to the project's prestige and financial stability.
The market's reaction, as reflected in the decline of British Land's stock, may encompass concerns over the company reducing its direct exposure to the London office market, which is currently showing signs of resilience. However, the analyst's perspective suggests that the transaction could be beneficial in the long term by providing liquidity and reducing risk exposure for British Land.
Investors and market watchers will be keeping an eye on the development of 2FA and British Land's future transactions to gauge the health of the London office market and the company's strategic positioning within it.
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