UK Property M&A Deals Soar In Q3

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M&A deals in the UK property sector jumped to a yearly high in the third quarter, with deal values reaching more than five times those seen in the same quarter last year, accountants and business advisers Grant Thornton UK LLP said in a report Monday.

The firm's Property M&A Tracker, which tracks UK non-residential, real estate, and real estate management and development deals, said the total value of deals touched GBP 4.1 billion in the September quarter, the highest quarterly figure seen this year. Moreover, the amounted exceeded the GBP 800 million deal value seen in the same period last year.

The firm said there was a significant rise in the number of non-residential property transactions, rising above 10 deals in a quarter for the first time since the second quarter of 2008. Standing at 17, the deals were up 113% from the first and second quarters of this year, when they totaled 8.

Commenting on the results, Clare Hartnell, Head of Property and Construction at Grant Thornton said the quarterly figures were strengthened by big ticket M&A activity, but recent easing of the availability of credit coupled with lower interest rates could have spurred-on buyers back into the property deals market.

However, Hartnell noted that many companies were putting off selling in the hope of achieving a better valuation. "This is having a knock on affect on the availability of M&A opportunities meaning those that do exist, are more likely to get snapped up." But, she pointed out that as the number of deals increase, there would be a flattening out of the average transaction values.

"On the face of it, this quarter indicates that a number of companies are beginning to react to general improvements in the property market. Nevertheless we view this up-tick in activity cautiously as the risk of a further property downturn may be just around the corner."

"Much rides on the economy's ability to sustain a return to growth, the impact of a rising level of unemployment, changes to credit conditions and possible rises in interest rates, all which may adversely impact on the affordability of deals,"Hartnell added.

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