Shield sector focus:
Property & Construction

The Property and Construction sector includes commercial and residential property portfolios, property management and property development companies, construction companies, architectural, engineering and quantity surveying firms and all related services.

Shield Corporate Finance's recent deals in this sector include the sale of Scottish hotel group, Freedom of the Glen Ltd, to Swallow Hotels for a premium consideration.

Shield has also been retained by a leading UK house builder to raise funds for expansion and has recently undertaken a valuation of a company which controls one of the UK's largest ground rent portfolios. In his previous role as JPMorgan's Head of Sell-Side M&A, Europe, David Young advised on the acquisition of the motorway services company, Tank and Rast AG (the largest ever German LBO at the time).

Property & Construction sector M&A comment

Shield Corporate Finance expects consolidation in the UK house-building sector to continue apace. The recent announcement that two of the UK's largest house builders, George Wimpey and Taylor Woodrow are to merge, follows hot on the heels of Barratt Development's acquisition of Wilson Bowden and Galliford Try's acquisition of Linden Homes. Despite rising house prices stretching affordability levels for many home buyers, the fact that there is an annual shortfall of around 50,000 in the number of homes being built a year should mean that demand, and therefore prices, remain buoyant, at least in the medium term.

As with the house-building sector, Shield forecasts that there will be a swathe of mergers and acquisitions in the UK commercial property sector too, driven mainly by the launch of REITs earlier this year. Property companies converting to REIT status will be able to acquire their rivals without inheriting their capital gains liability, while at the same time they will avoid the 4 per cent stamp duty on the direct purchase of property. This is likely to mean that those companies that do not want to, or are unable to, convert to REIT status may become vulnerable to bids from their competitors who have been granted REIT status. M&A activity will also result from the need for UK-REIT converters to divest portfolios which do not fit the REIT model, which in turn will create opportunities for non-REITs.