Property share sales hit by 'investor apathy'

Three property share issues have been hit this week in the face of investor apathy. Spanish developer Reyal Urbis has decided to call off a share sale planned for end-June because of unfavourable market conditions. 'At the moment, the market doesn't discriminate in an adequate fashion between the different segments, business models and companies that make up the sector,' the company said on Wednesday. The planned offering was expected to raise up to EUR 800 mln.

Reyal Urbis said that proceeding with the share sale wouldn't be 'convenient' for shareholders. The company, with assets valued at EUR 10 bn, said it can finance its growth without selling shares. Reyal Urbis did not indicate whether the IPO will be carried out later this year. In 2006, Reyal, the biggest homebuilder in Madrid, launched a EUR 3 bn bid for developer Urbis in a deal that was completed last December. Reyal bought a 96% stake in Urbis at a price of EUR 26 per share. The merger between the two developers is to be completed this week.

The move coincided with a decision by the UK's Vector Hospitality to shelve its proposed £1.8 bn (EUR 2.65 bn) flotation because of weak investor demand. Vector said late on Wednesday that 'as a result of market conditions, the offer of ordinary shares has been postponed.' The company did not give say if and when the IPO - an attempt to create the first hotel real estate investment trust (REIT) in the UK - will go ahead.

The scrapping of the IPO means that MWB Group will now not sell the Malmaison and Hotel du Vin property portfolio to Vector Hospitality, as the deal was conditional on the completion of Vector's flotation.

Earlier this week, Realia, another Spanish developer, had to cut the price range of its offering from EUR 7.9 to EUR 9.7 to EUR 6.5 per share because of insufficient interest from investors. The company closed at EUR 6.56 per share on Wednesday, up 0.92% from its initial share price of EUR 6.5 per stock.