LONDON/MILAN/HONG KONG (Reuters Breakingviews) – Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
Empty offices are seen at lunchtime in Canary Wharf, as the number of coronavirus disease (COVID-19) cases grow around the world, in London, Britain March 19, 2020.
– British Land’s solid offices
– UBI Banca’s MAC hack
– Hong Kong biotech fervour
NO MAN’S LAND. Office workers are proving dream tenants in the pandemic. Just look at British Land, which managed to collect 97% of its London office rents in March and April. Even more surprising is that companies are still happy to pay the 3.5 billion pound real estate group full price when most employees have not set foot inside those buildings since Britain’s lockdown started in March. Struggling retailers paid just 43% in the same period.
Valuations reflect the split. The value of British Land’s retail portfolio fell 26% while its office space was worth 2.3% more. Of British Land’s 7.1 million square foot office portfolio, some 220,000 square feet is currently under offer and CEO Chris Grigg is negotiating with big companies to lease out another 160,000 square feet of space. It’s a sign that, even with millions working from home, offices will retain their appeal when restrictions lift. (By Aimee Donnellan)
TURN OF THE MAC. Attempts by Italy’s UBI Banca to fend off a hostile bid from larger Intesa Sanpaolo are verging on the surreal. The mid-sized Italian lender’s board on Tuesday said the takeover, launched in February, should be declared void because of the ensuing pandemic. UBI argues that Covid-19 is a “material adverse change” which invalidates the offer. It has filed a lawsuit and a complaint with market regulator Consob.
The 3 billion euro lender’s rationale looks bizarre. So-called “MAC clauses” are designed to protect buyers by letting them walk away from a transaction if anything extraordinary happens. The pandemic is definitely one of those events. But it’s up to Intesa to decide whether or not to proceed. Given Italy’s complex legal system, however, the manoeuvre can buy UBI some precious time. (By Lisa Jucca)
BIOTECH FEVER. Hong Kong investors have caught the pharmaceutical bug. News that Shanghai Junshi Biosciences will start human trials for its experimental Covid-19 treatment pushed the stock up as much as 6% on Wednesday, extending a 60% rally since the start of the year. Shares of CanSino Biologics, an early stand out in the crowded race for a coronavirus vaccine, have nearly tripled over the same period.
The pandemic is injecting some much-needed excitement into the local bourse: The Hang Seng biotech index is up by more than a tenth this year, compared to a 13% slump for the benchmark. That bodes well for Hong Kong’s ambitions to become a biotech hub to rival the Nasdaq. Since it lowered listing barriers for startups two years ago, the Hong Kong exchange has attracted 28 such companies, with nearly a dozen more waiting to go public. The risk is that when the outbreak eases, so will the biotech boom. (By Robyn Mak)
Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.