Bottom Line: Lie of the land

THE 14 per cent discount to net assets at which CLS, the latest in a long list of property sector flotations, is coming to the market marks an interesting sea change in sentiment.

While the shares look cheap at 110p, valuing the company at pounds 110m and raising pounds 50m of new cash when lists close on Monday, the market is increasingly suspicious of property companies that are quasi-bond investments rather than plays on development or active management skills.

During the recession, CLS's portfolio of almost fully let office leases provided a cushion but, in the absence of rental growth, and with gilt yields rising, investors are demanding more than just a secure income stream. Competing with more exciting rivals such as Argent and London Capital Holdings, CLS has been well advised to rein in expectations.

An unusually high 5.5 per cent yield provides the only spice.