Remember this?

The quote to consider is:

“the uncertainty in financial markets has made the prospect of realising an appropriate value unlikely”
Today in its Q3 report, 4 months later, Chief Exec Stephen Hester says that the British Land valuers were encouraged to write down assets and had “taken a hatchet across the board”. Realisation that the market sets "appropriate value" has, it seems, dawned.

Or has it? Mr Hester continued cheerfully that the good thing about this blood bath is that the speed of price declines “augurs well for a shortened duration of the downcycle”.

Might British Land have just moved up the Kübler-Ross scale into the ‘Denial’ stage of the grieving process? Its portfolio now yields 5.4%; even with today’s Bank of England rate cut most loans are above 5.75%; capital values are in free fall; and the trend for rents – crucial to the long term profitability of property - is slowing. IPD have the frightening quarterly data here.

British Land is not the sole romantic optimist forecasting a quick recovery. But to accept it might be so quick as to get out this year from what IPD call the deepest and fastest downturn on record some suspension of crudulity may be required.

Still, it is true that some comfort can be found in the expected rate cuts from the ECB and a consequent steepening of the yield curve. But today the hawkish ECB stayed on hold; credit markets remain weak with banks paying more to borrow than many corporations; and in two key markets for British Land, the UK and Spain, bank competition for deposits looks set to intensify with likely redemption outflows from investment funds one consequence. All of which makes it either exceptionally brilliant or ludicrously premature to be at this stage calling what an “appropriate value” might be.

Messers Hester and Gibson-Smith are laying some more credibility on the line.

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