January 19, 2018 by tradersnote
Shaftesbury plc is a real estate investment business based in the UK. The firm was listed on the London Stock Exchange in 1987; it is a member of the FTSE 250 Index. In 2007, the business converted to a real estate investment trust (REIT), meaning Shaftesbury can develop, own and operate real estate tracts that generate direct income.
When people think of a real estate investment endeavour, the first thing that may spring to mind is a company that buys up large plots of land, develops property (whether residential or commercial) and then sells its creations on to the highest bidder. While this picture is broadly correct, it barely scratches the surface of what Shaftesbury plc does. Shaftesbury focuses on the development of ‘villages’ – large expanses situated in the heart of Central London, incorporating property for both residential and commercial purposes, including apartments, restaurants, bars, offices, retail spaces and even music venues. As such, the firm own 14 acres of land in the heart of the UK capital, and of these developments should further imply, these developments attract significant income, and are leased to the highest of high bidders; in September 2014, the company’s portfolio was valued at £2.6bn.
Shaftesbury plc shares represent an elusive double whammy; an investment in a physical asset, and an investment that is insulated against shifting market dynamics due to its self-contained diversity. In the case of the former, ‘bricks and mortar’ investments will always be favoured by traders and investors over ‘thin air’ asset classes, as the value of physical assets rarely depreciates over time, and doesn’t vanish in the event of economic downturn. In the case of the latter, as properties held in the overall ‘village’ batches. Physical assets – especially commercial and residential property – are generally too expensive for private investors to build or purchase outright themselves, so purchasing Shaftesbury plc shares represents a way of accessing the (potentially vast) returns that come with the sector. Furthermore, while the 2008 financial crash naturally had grave implications for both the property market in all its forms and the bank balances of average consumers, both property and entertainment emerged much less scathed than other comparable consumer sectors – and since 2012, with improvement in the UK’s economic fortunes, the stock of these spheres has improved further too.
However, it would be wrong to conclude that Shaftesbury shares represent a ‘way in’ to the lucrative property market for investors, or the effective democratisation of a coveted physical asset. While purchasing shares in Shaftesbury plc may be on balance more inexpensive than purchasing a property outright, it is still an investment that comes at a significant premium. It is difficult to effectively value an expensive share, such as Shaftesbury – on the one hand, insulation from the negative implications of recession and significant dividends are worth every penny to some. However, those without appropriate existing capital to buy a significant number of shares may never experience the benefits that come with them.
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