Myerson loses his patience:The Investment Column

Brian Myerson's call to break up Greycoat seems the act of a man whose patience has finally run out. Mr Myerson's UK Active Value fund bought into the property group in 1993 when the company had fallen foul of the recession and was on the brink of extinction. Having acquired his stake at around 130p Mr Myerson has watched with irritation as the share price has gone nowhere in the past three years, barring a brief flurry immediately after the restructure.

It is clearly frustration at this lack of progress that has prompted his call to liquidate Greycoat's assets. With the share price edging up 5.5p to 148.5p yesterday, Mr Myerson is basically hoping to get his money back.

According to the Myerson camp, this is a good time to sell. The property market is rising and Greycoat should cash in now rather than wait too long. This, he claims, is what the company did last time when the market turned against it. Mr Myerson has presumably sounded out other institutional shareholders to gauge support for his proposals but he could find the opposition more powerful. There are plenty of analysts and other shareholders who say that the central London commercial property market, to which Greycoat offers exposure, is growing steadily and will not peak until 1998. They also say hanging the "for sale" sign over the portfolio will not help the selling price.

Greycoat shareholders have clearly had a miserable time in recent years. The shares slumped from 771p to 39p between the end of 1991 and the beginning of 1993. The shares also stand at a substantial discount to the rest of the property sector. Analysts are forecasting a net asset value for Greycoat of around 185p for the year to March 1997. That gives a discount to net assets of nearly 20 per cent compared to the average 7 per cent of larger rivals.

There is a case for Greycoat to prune its portfolio, possibly with the sale of the Embankment Place site. New developments will come to the market early in 1998 while the company is also looking for London properties to upgrade. Mr Myerson has done some investors proud by putting a rocket under the boards of companies such as Liberty. But shareholders should reject his proposals on this one.