Bottom line: Wates for the bulls

WATES City of London should be commended on still being around, unlike other City specialists, even to think about the next property cycle.

But staging a second cash call in nine months, a two-for-seven issue at 73p to raise pounds 31m, is further evidence that Wates does not have the critical mass to capitalise on improved conditions. As is the search for a pre- funding deal on a development site in Queen Street.

The fact that Mercury Asset Management has unusually agreed to sub-underwrite the whole issue if needed indicates a degree of enthusiasm for a share in the revival of the City office scene. But it is far from evident that it is right to hitch its wagon to Wates.

Vintners Place, a 260,000 sq ft development is still empty and will have to be refinanced next year.

A downward rent review on a building in Queen Victoria Street means that last year's 73p net asset figure was actually about 3p too optimistic.

That means that the rights issue has been priced extremely aggressively compared with a share price that closed 5p lower yesterday at 75p.

With no prospect of a dividend this year, leave it to the institutional bulls.

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