MEPC in sale talks with GE Capital

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The Independent Online
MEPC, Britain's third-largest property group, said yesterday it was talking to GE Capital about selling its Australian and US businesses.

Speaking as the company announced that pre-exceptional pre-tax profits for the year to September rose 20 per cent to pounds 167m, James Tuckey, the group's chief executive, said that GE Capital, part of General Electric of the US, was "certainly" one of the companies MEPC was talking to in relation to the disposals, initially flagged in September.

The sale, which is likely by next spring, is expected to raise around pounds 1bn. MEPC has said it will return at least pounds 300m of the proceeds to shareholders and is looking to build up its property portfolio in the UK. Mr Tuckey, who has rejected merger proposals from Hammerson and Burford this year, did not rule out the possibility of a merger, but said it was not "actively considering" such a venture.

Lord Blakenham, chairman of MEPC, said that in the UK, property markets were strengthening and its portfolio, which is being focused on the UK market, was "well positioned to benefit". However Mr Tuckey said the company would have to be careful about selecting investments in Britain because "we are obviously approaching the top end of the cycle".

Lord Blakenham said the disposal of the Australian business was under way: "We have had considerable interest from a wide range of prospective buyers." He said conditions in the US and Australia were favourable for disposals with a stronger property market in the US and growing interest in the commercial property sector in Australia.

Lord Blakenham said group profits would have been pounds 2m higher at constant exchange rates, but added: "Now that we have decided to sell the overseas businesses, steps have been initiated to limit our exposure to any further strengthening of sterling, particularly against the Australian dollar."

MEPC's net asset value after providing for future disposal costs rose 10.4 per cent to 497p. Total return on the group's property portfolio was 19 per cent with the dividend unchanged at 20p. Shares in the company closed 9p higher at 548p.