Great Portland Estates shares rise as bargain-seeking investors eye London office giants

London offices are increasingly in the sights of opportunistic investors, despite signs that working-from-home trends look set to continue for some time.

Today it emerged that private equity firm KKR had snapped up a 5.4% stake in Great Portland Estates, sending shares in the West End property firm up by 9% to 600.6p.

Shares in London office companies have fallen as much as 40% this year, but analysts at UBS said last week there were potential rewards for investors prepared to look through the short-term disruption caused by Covid-19.

They said that 40% discounts on the net asset values of Great Portland and rival Derwent London were an opportunity to buy into two “quality names in the sector”.

The Swiss bank pointed out that the amount of office space that can be dropped by companies will be limited, particularly in the already tight London market.

Today’s rally for Great Portland took its shares to the top of the FTSE 250 index risers board, with Derwent also coming off recent lows with a rise of 3% to 2440p.

The appetite for risk was seen elsewhere in the second tier, with cruise ship operator Carnival up by 7% and South-East-focused housebuilder Crest Nicholson ahead 5%.

Sentiment was driven by a strong start to the week for Asian markets, with M&A activity involving a £2.9 billion bid by Caesars Entertainment for William Hill also helping.

The FTSE 100 index stood 65.36 points higher at 5,908.03, with top-flight property firms Land Securities and British Land also up by more than 4%.

Guinness and Smirnoff drinks giant Diageo surged 6% higher to 2688p after it said it was trading ahead of expectations in the United States.