The Times - UK (2020-10-20)

38 2GM Tuesday October 20 2020 | the times

Business

Delivering food and household items

has become an increasingly important

source of revenue for Alibaba, especial-

ly now that Chinese consumers are

avoiding physical stores because of the

pandemic.

Mr Zhang said the crisis was acceler-

ating the “digitalisation of consumer

1

Carmakers may be forced to

sell a rising share of electric

vehicles each year under

California-style plans being

considered by the government, as

ministers aim to fulfil the “zero

emission vehicle mandate” by

ending the sale of new petrol and

diesel cars by 2035 or earlier.

Page 4

2

China’s economy has emerged

from the coronavirus

pandemic in rude health and

recording growth, in a year that

has left the rest of the world

crippled and facing a winter of

deep recession. Pages 12, 40

3

About £775 million has been

wiped off the stock market

value of Boohoo after the

troubled fast-fashion group

confirmed that PWC, the Big Four

accountant, was standing down as

its auditor. Page 37

4

Cyrus Capital, an American

vulture fund, has claimed that

Flybe will be back in the air

next year despite buying none of

its planes in a rescue deal for the

collapsed airline. Administrators

for Flybe said that the former

part-owner of the airline had

bought its “brand, intellectual

property, stock and equipment” for

an undisclosed sum. Page 37

5

Land Securities, one of

Britain’s biggest commercial

property owners, has

announced an overhaul that

includes selling a third of its

portfolio — about £4 billion worth

of properties from its £12.8 billion

holdings — to reinvest in new

developments and regeneration

projects.

6

The Competition and Markets

Authority has warned that it

will launch investigations into

Facebook and Google within a

year unless the government

creates a new regulator to police

powerful tech companies. Page 40

7

Amigo, the provider of high-

interest loans, must seek

permission from the Financial

Conduct Authority before it pays

dividends to shareholders or cash

bonuses to its bosses after the City

regulator tightened its oversight of

the guarantor lender.

Page 42

8

An independent review into

alleged regulatory failings

surrounding the collapse of a

fund that lost investors more than

£100 million is almost complete.

The investigation into the City

regulator’s handling of the demise

of Connaught Income Fund Series

1 is concluded bar final checks.

Page 43

9

Compass Pathways, a four-

year-old venture based in

London, has developed a

synthetic version of psilocybin, the

active ingredient in magic

mushrooms, which the company’s

owners believe, when combined

with therapy, can help alleviate the

symptoms of clinical depression.

Page 44

10

Desperate holidaymakers

prepared to pay a mark-

up to get to Europe during

the summer meant that the

pandemic-hit revenues of Getlink,

the Paris-listed Channel tunnel

operator, were not as bad as they

might have been. Page 45

Need to know

Reality bites for Landsec

£12.8bn

£1.6bn

£4bn

Total portfolio value

Value of “subscale sectors”

including hotels, retail parks and

leisure properties it plans to sell

Total value of properties it plans to

sell to reinvest in new development

in the next six years

Combined portfolio

London

office

Leisure

& hotels

Retail

parks 3%

Outlets

Regional

retail

London retail

Other 3%

54%

11%

13%

7%

9%

Scary monster

One of Britain’s biggest commercial

property owners has announced an

overhaul that includes selling a third of

its portfolio to reinvest in new develop-

ments and regeneration projects.

Land Securities said it would sell

about £4 billion worth of properties

from its £12.8 billion portfolio over the

next six years, initially taking advan-

tage of strong investor appetite for

some of its central London offices.

It also plans to sell £1.6 billion of

hotels, retail parks and leisure proper-

ties, where it does not believe that it has

a competitive advantage.

Mark Allan, 48, who took over as

chief executive six months ago, said

Land Securities would become “net

sellers” over the next two years and

reinvest the capital in offices and

regeneration projects in London.

He announced the new strategy at a

virtual meeting with shareholders and

City analysts on Monday. He said the

company had to “face reality” and

come up with a “proper plan” to

respond to the pandemic, including re-

ducing its exposure to regional retail,

where it expects rents to fall by up to

25 per cent until they are “sustainable”.

The FTSE 100 company was founded

76 years ago by Harold Samuel and

became Britain’s largest property com-

pany in the 1960s.

Two thirds of the landlord’s portfolio

is in London, including the Nova office

complex in Victoria and the One New

Change shopping centre near St Paul’s

Cathedral. Regional shopping centres

and outlets account for a fifth of its

portfolio.

However, Land Securities missed out

on the boom in warehouse property,

which enabled Segro, the warehouse

developer, to steal its spot as the largest

listed property company by market

capitalisation in 2018.

Instead it has been hampered by its

exposure to falling rents and values in

retail property. Negative senti-

ment over high street retail

has driven a 46.5 per cent

fall in its share price

since the start of the

year. The shares

now trade at a

55 per cent dis-

count to the com-

pany’s 1,182p a

share net asset

value. The company has seen rental

income fall sharply during the crisis,

warning earlier this month that 67 per

cent of its retail tenants and 18 per cent

of office tenants had not paid rent due

in September.

The strategy is a shift from recent

years under the leadership of Rob Noel,

56, who took a more cautious approach

towards new developments in 2014. Mr

Noel stepped down as chief executive in

March and is now chairman of Ham-

merson, the shopping centre owner.

Rental income will be less of a focus

in the future as the landlord concen-

trates on delivering “value creation”

through new developments. “Deliver-

ing our strategy will involve taking

more operational risk and this will be

offset through lower levels of financial

gearing,” the company said.

City centre developments could in-

clude logistics centres, healthcare,

housing and retirement living. “Having

scale, having a track record, being able

to take on large complex projects that

many businesses would struggle to take

on, is a real advantage,” Mr Allan said.

It does not plan to start new develop-

ments until there is more certainty

about the coronavirus crisis.

However, the company is confident

about the resilience of London and

future demand for office buildings.

“Our view is that cities have always

had crises along these lines over many

centuries and they have always recov-

ered and typically come back stronger,”

Mr Allan said. “We think London will

emerge strongly with lots of opportuni-

ty, and particularly in offices, where we

are going to see occupiers look for more

flexible, adaptable, sustainable healthy

workplaces that they can use to attract

the right workforce.”

Workspace that is less desirable is

likely to create redevelopment oppor-

tunities, the firm predicted.

There is little investment appetite for

regional shopping centres in the

present market. The landlord hopes to

improve footfall by replacing some

struggling retail tenants with

services such as hairdress-

ers and health centres.

It also anticipated

introducing pop-up

shops for online

retailers in depart-

ment stores and

introducing inde-

pendent local re-

tailers to some

shopping centres.

Shares in Land

Securities closed up

6¾p, or 1.3 per cent, at

532p.

Louisa Clarence-Smith

Property Correspondent

Mark Allan believes

that London and

other cities will emerge

strongly from the crisis

Alibaba pays $3.6bn for control of hypermarkets

Alibaba is buying a controlling stake

in one of China’s largest supermarket

chains to strengthen its grocery

delivery division.

The Chinese ecommerce giant is

investing $3.6 billion to build a majority

position in Sun Art Retail Group, a

Hong Kong-listed hypermarket opera-

tor. It will acquire equity interest from

Auchan, the French retailer that has a

51 per cent holding in Sun Art. It has

also offered to acquire shares from the

Chinese retailer’s minority investors.

The deal is expected to increase

Alibaba’s stake to about 72 per cent,

from 21 per cent at present. It is part of

efforts to expand into traditional retail

and grocery deliveries to counter a

slowdown in other divisions.

Alibaba was co-founded by Jack Ma,

an English teacher turned entrepre-

neur, in 1999. Most of its revenue comes

from the fees it charges to use its online

marketplaces, although it has branched

out into a variety of new markets, in-

cluding media, online payments, cloud

computing and artificial intelligence.

Alibaba styles itself as the gateway to

the Chinese consumer and has over 700

million regular users. In the second

quarter revenues rose 34 per cent to

$22 billion and it reported a profit after

tax of $6.6 billion. Mr Ma, 56, who has

an estimated fortune of $42 billion,

stood down as chief executive last year

and was replaced by Daniel Zhang, 48.

Acquiring Sun Art, a leading hyper-

market owner with 481 stores across

China, will boost Alibaba’s distribution

network. The pair already have a

grocery partnership, with Alibaba

delivering goods to shoppers’ homes.

lifestyles” and the Sun Art deal would

strengthen its digital strategy.

Alibaba has built a chain of physical

outlets across China, called Freshippo,

which operates more than 200 stores

that are optimised for online deliveries.

The company also works with private

convenience store owners to offer

technology and data analytics services.

Many of Alibaba’s competitors have

adopted a similar strategy. JD.com, a

Chinese company that is not linked to

Britain’s JD Sports, runs 7 Fresh, while

Pinduoduo owns a stake in a home

appliance seller called Gome Retail.

Separately, it is believed that regula-

tors in Hong Kong have approved a

plan to list a payments business spun

out of Alibaba on its stock exchange.

Ant Group is expected to be valued at

more than $250 billion at its dual listing

in Hong Kong and Shanghai.

Simon Duke Technology Business Editor

Auchan, of France, had a controlling

stake in China’s Sun Art Retail Group

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Profile

I

t is hard to imagine a more

challenging time to take over

one of the biggest jobs in

property (Louisa Clarence-

Smith writes).

Mark Allan, 48, was unable to

meet staff in person when he took

over as chief executive of Land

Securities in April, with the share

price at a decade low and the

outlook for retail and office

occupancy made more uncertain by

the pandemic. A former KPMG

accountant, Mr Allan was chief

executive of Unite, the student

housing provider, between 2006

and 2016, when the company’s

market capitalisation doubled from

£700 million to £1.4 billion.

He joined Land Securities from St

Modwen Properties, where he was

chief executive for four years. He

overhauled St Modwen, selling

more than £800 million worth of

retail centres and office buildings

and increasing its exposure to

higher-yielding industrial and

logistics sites in better locations.