Brixton to focus on London, no European deals

By Miyoung Kim

LONDON (Reuters) - British industrial property owner Brixton Plc (BXTN.L: Quote, Profile, Research, Stock Buzz) has no plans to expand into Europe and is set to focus on organic growth, boosting its presence in the prime London area, its chief executive said on Tuesday.

"I'm not interested in a development program in Europe... None of those markets have anything like the supply tension that the south east of the UK has," Tim Wheeler said at the Reuters Real Estate Summit in London.

Brixton, which had businesses in continental Europe until 1999, has more than 90 percent of its 2.1 billion pounds ($4.2 billion) portfolio in southeast England and in the Heathrow Airport area -- the world's priciest warehouse location.

Its tenants include the Royal Mail Group, pay-TV operator BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz), Morgan Stanley, and British Airways (BAY.L: Quote, Profile, Research, Stock Buzz).

"It's not a coincidence -- the highest land values in the global industrial property market and the highest rent value anywhere in the world are in southwest London, because supply is so strained and obviously demand is strong... Europe doesn't experience that in any single locality."

"The city is booming and Heathrow is like a pressure cooker... T5 (Heathrow's new terminal) is going to increase the airport capacity by 50 percent," Wheeler said.

SPECIALISED

Wheeler said Brixton would continue to focus on London and surrounding areas because the industrial property market outside the capital is under pressure.

Wheeler said the company is eyeing property around Heathrow that has been put up for sale by Spain's Ferrovial (FER.MC: Quote, Profile, Research, Stock Buzz), owner of British airports operator BBA.

He warned of a sharp downturn in industrial property markets outside London and southeast England because the supply of industrial property floorspace is at its highest since at least the mid-1980s.

"The secondary market is massively under pressure because of financing reasons... It is a quite daunting picture outside London," he said.

The proposed 700 million-pound sale of private property company Dunedin, which included a portfolio of assets bought off Brixton last year, would be a test of where the secondary market is, he said. "My hunch is that they will struggle to sell it."

Wheeler added Brixton's shareholders want the company to remain a specialized industrial property firm.

"The top 16 REITs in the United States are specialists -- the top 5 companies in the UK are not specialists," he said. "We see a lot of shareholders continuously asking when big companies are going to specialize."

More than 50 percent of Brixton's shareholders are overseas investors and the Government of Singapore Investment Corp. (GIC) is its largest shareholder with a 10.4 percent stake.