Barron's : Safran Has 20% Upside as New Jet Engine Roars


Safran Has 20% Upside as New Jet Engine Roars
The French aerospace concern could see cash flow surge after launching the LEAP engine.

The airline industry’s long-term outlook is bright, as a burgeoning global middle class embraces air travel.
That bodes well for Safran (ticker: (SAF.France), the French aerospace and defense contractor, which has made a big bet on a new line of fuel-efficient, low-emission engines through CFM International, its 50/50 joint venture with General Electric (GE).

The so-called LEAP engine (the acronym stands for leading-edge aviation propulsion) is designed to power the latest narrow-body jets, including Airbus Group’s (AIR.France) A320neo and Boeing’s (BA) 737 MAX. As costs tied to the engine’s development decline, Safran’s free cash flow could rise sharply, propelling the company’s earnings and its shares.
Safran’s stock, which closed on Thursday at 60.92 euros ($67.63), could face some near-term head winds if Britain’s decision to leave the European Union causes economic growth to dip, reducing demand for air travel. But longer-term gains could exceed 20%. The Paris-listed shares more than tripled in the five years ended on Oct. 7, 2015, peaking at €72.45. They have since fallen on worries about the global economy and a shift in production from a popular family of engines to the new LEAP lineup.
Safran is trading for 15.2 times next year’s estimated earnings of €4.00 a share, a modest premium to the Stoxx Europe 600 index. The company also has American depositary receipts (SAFRY), which closed on Thursday at $17.02. Four ADRs are equivalent to one ordinary share.
Safran was created in 2005 through the merger of Snecma, a maker of jet engines and rocket motors, and Sagem, a specialist in communications electronics. The French government owns 15.4% of the company, down from 36% a decade ago.
Aerospace propulsion contributes 54% of revenue, which could total €18.06 billion this year. Aircraft equipment—including landing gear, wheels, and carbon brakes—generates 28%, and defense and security products, such as biometric-identification solutions, account for the remainder. Analysts put net income at €1.58 billion this year, rising to €1.63 billion in 2017, on estimated revenue of €18.7 billion.


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In addition to supplying commercial aircraft engines, Safran makes engines for the Mirage 2000 and Rafale jet fighters from Dassault Aviation (AM.France), and engines and thrusters for Arianespace launch systems. Maintenance, repair, and overhaul services account for more than half of revenue in the engine business; the company sells engines at about cost, but reaps significant profit from aftermarket services. Revenue from services, which totaled €5 billion in 2015, is forecast to grow by high-single digits for the rest of this year, and the outlook thereafter is encouraging.
Almost 30,000 of Safran’s CFM56 engines have been delivered to customers. According to Berenberg, about 5,000 are due for a first major overhaul in the next three years, and another 4,000 are due for a second. Those figures translate into annual service-volume growth of about 7%. Profit margins are growing, too, due to more hourly based service agreements rather than contracts that charge for spare parts, repairs, and labor costs.
By 2018, Safran could achieve an operating profit margin above 15%, compared with last year’s 14%, due to the growth of aftermarket services. Analysts are also optimistic about the LEAP launch; the first engines were delivered to Airbus in April. CFM has received orders and commitments from airlines for 10,534 LEAP engines, worth more than $140 billion. Combined with outstanding orders for the CFM56, CFM effectively has locked in about eight years of production.
SAFRAN HAS INVESTED heavily in recent years in new projects, including LEAP and the Silvercrest engine for Dassault’s Falcon 5X business jet. Capital expenditures remain at peak levels this year, and analysts at Berenberg estimate a €1 billion reduction of capex, research and development, and working-capital outflows from 2016 to 2020.
Safran is expected to generate €1.04 billion of free cash flow in 2017, roughly flat with this year’s level. But free cash flow could reach €2.4 billion a year by 2020, according to JPMorgan Cazenove.

Ramped-up cash generation “is what is going to drive the stock,” says William Booth, a portfolio manager and senior analyst at New York–based Epoch Investment Partners, which has owned Safran shares since 2012. He expects the stock to trade up to €72 in 12 months, equal to about 18 times estimated 2017 earnings. In the past five years, Safran has traded at a forward price/earnings ratio of as much as 20.
Andy Pauly, an analyst at Manning & Napier, also is attracted by the potential growth in free cash flow. M&N, which owns Safran shares, puts the company’s fair value at €75 a share.
Safran’s balance sheet is in good shape, with net debt of €783 million at the end of last year, down from €1.5 billion a year earlier. The company could swing to a net cash position by 2018, according to analysts’ projections. The shares yield 2.3%. With cash flow about to rise sharply, this could be a good entry point for investors.

>>> US Close Dow +0.11% S&P+0.19% Nasdaq+0.41% Russell+0.42%


Closing Market Summary: Averages Extend Post-Brexit Rebound

The stock market ended an upbeat week on a modestly higher note, extending its post-Brexit rally to a fourth straight session. Today's leg of the rebound was relatively restrained, owed partly to a 3.1% rally in the past three sessions. Other contributing factors for today's trade included softening the dollar and sector leadership from the heavily-weighted consumer discretionary (+0.8%), health care (+0.6%), and industrial (+0.4%) sectors. The Nasdaq Composite (+0.4%) finished ahead of the S&P 500 (+0.2%) and the Dow Jones Industrial Average (+0.1%).

Equity futures hovered near their flat lines this morning as participants examined muted trade in China against a continued rally in European bourses. China's Shanghai Composite added 0.1% as investors looked to further policy stimulus in the wake of disappointing PMI data. China's state-issued Manufacturing PMI for June (50.0; last: 50.1) showed no improvement while Caixin Manufacturing PMI signaled an accelerated contraction (48.6; last: 49.2). Investors in Europe also turned a hopeful eye to their respective central banks as they continue to digest the implications of last Thursday's Brexit vote.

The S&P 500 (+0.2%) extended it opening-hour rally, climbing alongside European bourses. However, the benchmark index pulled back from its high (2108.71) by mid-morning as investors weighed a similar move in European equities. The broader market slipped through the afternoon as the benchmark index failed to hold technical support near the 2105 price level. A final hour rally would push the S&P 500 back above the psychological 2100 level as seven sectors finished in the green. Consumer discretionary (+0.9%) led telecom services (+0.7%) and health care (+0.6%) while financials (-0.5%), consumer staples (-0.3%), and utilities (-0.1%) ended in the red.

Automakers outperformed in the consumer discretionary space (+0.9%) as investors responded to June sales data. On that note, General Motors (GM 28.89, +0.59) climbed 2.1% after reporting that year-over-year U.S. retail sales rose 1.0% in June. Elsewhere, Ford (F 12.72, +0.15) led after reporting that U.S. auto sales rose 6.0% on a year-over-year basis. Separately, travel and cruise names displayed relative strength as Royal Caribbean (RCL 69.11, +1.96) jumped 2.9%.

Biotechnology outperformed in the health care space (+0.6%), evidenced by the 2.1% gain in the iShares Nasdaq Biotechnology ETF (IBB 262.75, +5.41). The ETF erased Brexit-related losses, rebounding 8.8% since Monday's settlement. In the broader sector, AbbVie (ABBV 62.71, +0.80) gained 1.3% after the FDA approved its Humira medication to treat panuveitis. The broader health care sector rebounded 4.0% on a weekly basis, trailing only utilities (-0.1%; week-to-date: +4.1%) and telecom services (+0.7%; week-to-date: +4.1%) over that period. 

The economically-sensitive financial sector (-0.5%) succumbed to profit-taking as investors looked to lock in gains following results from this week's Federal Reserve supervisory stress test. In the group, JPMorgan Chase (JPM 61.26, -0.40) and Bank of America (BAC 13.10, -0.17) lost a respective 0.7% and 1.3%.

The U.S. Dollar Index (95.69, -0.45) finished off its session low as the euro and the yen gained ground against the greenback. The single currency gained 0.2% against the dollar (1.1129) while the buck lost 0.6% against the safe-haven yen (102.60).

The Treasury complex ended on a mixed note as the yield on the 10-yr note slipped three basis points to 1.44% while the 2-yr yield ticked up one basis point to 0.59%. For the week, the yield on the 10-yr note fell five basis points despite a 3.2% gain in the S&P 500.

Today's participation was below the recent average as fewer than 831 million shares changed hands on the NYSE floor.

Today's economic data included the ISM Index for June and Construction Spending for May: 

  • The ISM Index for June produced a nice headline surprise, checking in at 53.2.
    • That was above the consensus estimate of 51.4 and a step up from the 51.3 reading for May. The dividing line between expansion and contraction is 50.0.
    • With the June report, the manufacturing sector continued to operate in an expansion mode for the fourth straight month.
    • That's a welcome understanding in a market environment where growth slowdown concerns are evident.
    • We'd be more enthused if this was hard data as opposed to survey-based data; nonetheless, there is some value in the recognition that the ISM Index has been above 50.0 for four months running now.
    • The June report revealed increases in all component indexes, with the exception of the Prices Index, which fell from 63.5 to 60.5.
    • That's not a bad development actually. Manufacturers are still paying higher prices for raw materials, although the price escalation slowed for them in June.
    • Looking elsewhere, there were encouraging pickups in the New Orders Index (from 55.7 to 57.0), the Production Index (from 52.6 to 54.7), the Backlog of Orders Index (from 47.0 to 52.5), the New Export orders Index (from 52.5 to 53.5), and the Employment Index (from 49.2 to 50.4).
  • Total construction spending declined 0.8% in May after a downwardly revised 2.0% decline (from -1.8%) in April.
    • The consensus estimate for May called for a 0.5% month-over-month increase. The back-to-back declines in construction spending will stand as a negative input for second quarter GDP forecasts.
    • The estimated seasonally adjusted annual rate of $1,143.3 billion for May was up 2.8% year-over-year. It's nice to know there is some growth, yet that marks the lowest year-over-year growth rate since November 2011.
    • The weakness in May stemmed from declines in both private construction and public construction spending, which fell 0.3% and 2.3%, respectively, versus April.
    • On the private side, residential spending was flat while nonresidential spending dropped 0.7%.
    • The largest weights on nonresidential spending came from the manufacturing (-1.9%), commercial (-1.6%), office (-0.4%), and power (-0.2%) sectors.
    • On the public side, residential spending, which is de minimis, declined 0.7%.
    • Nonresidential spending was down 2.3% and featured a 5.4% decline in educational spending, a 4.6% decline in transportation spending, and a 5.1% drop in sewage and waste disposal spending.
    • On a year-over-year basis, private construction spending is up 4.7% while public construction spending is down 2.6%.

Bond and equity markets will be closed on Monday in observation of Independence Day. 

Tuesday's economic data will be limited to Factory Orders for May (consensus -0.9%), which will cross the wires at 10:00 ET. 

  • Dow Jones +3.0% YTD
  • S&P 500 +2.9% YTD
  • Russell 2000 +1.8% YTD
  • Nasdaq Composite -2.9% YTD 

>>> Weekly Update

Weekly Market Update: Brexit Turmoil Fades, For Now


Global markets began the week under a dark cloud of uncertainty in the wake of the UK voters' decision to leave the EU. On Monday investors continued to flee from risk assets as ratings agencies cut the UK's sovereign ratings, European banking stocks got pummeled, and the British Pound hit new 30 year lows. Uncertainty persisted about the timing and path forward on separation from the European Union, and the leadership transition in the Conservative Party (and perhaps also the Labour Party) dominated the conversation in London along with the markets' reaction. The S&P traded down through the 200 day moving average for the first time since March and money surged into global bonds markets sending US Treasury yields to levels not seen since 2012. The Brexit vote propelled gold to a new 15-month high above $1,300, and pound sterling remained under pressure. Cooler heads prevailed by the end of the week and stocks reversed higher. For the week the DJIA gained 3.1%, the S&P500 rose 3.2%, and the Nasdaq added 3.3%, while the UK's FTSE-100 surged over 7%, notching its best performing week in nearly five years.

At the opening bell on Tuesday, though, confidence was resurfacing as investors took a step back to fully evaluate the landscape. Despite somewhat tougher talk by European officials it was becoming clear that the UK government had no intention of invoking article 50 before a new PM is installed. Hope built that the resulting 2+ years before any agreement needs to be reached should allow cooler heads to prevail and officials to hammer out a mutually beneficial trade pacts. Policymaker responses also went a long way to underpin improving sentiment. Central bankers from around the world chimed in they were prepared to take measures to ensure liquidity and proper functioning of financial markets. South Korea announced a $17B stimulus package and China's president Li pledged he won't allow a rollercoaster ride in Chinese capital markets. Importantly, despite the surge in volatility there were no reports of dislocations in the capital markets or the global banking system. On Thursday the BOE's Carney plainly stated that further easing was likely this summer and that only solidified the growing belief the US Fed was likely on hold through year end. The notion the UK vote would keep central banks rates lower for even longer than previously thought helped fuel a dramatic rebound in equity markets.

By Friday most major stock indices had returned to levels seen heading into the UK vote but the flow of money into government bond markets had yet to really subside. The FTSE was the first to recapture its post Brexit losses while the GBP remained devalued by ~13%. The 10-year GILT went for wild ride and by weeks end the yield touched record lows below 0.9%. German Bund yields fell further into the negative territory while the Euro rebounded from a 1.09 low to stabilize around 1.11. US stocks surged into the end of the quarter aided calming words from central banks and a slew of M&A announcements. The US 10-year yield slipped more than 10 basis points since Friday's close to trade sub 1.5%, and remains down more than 20 basis points from where it stood before the UK vote. The US Dollar index is holding up about 2.5% since the Brexit vote.

Asia's FX flows were just as volatile as the Brexit effects played out. The USD/JPY after briefly trading below 99 on Friday, retraced back above 103 on improving risk sentiment. Verbal intervention remained heavy in Japan, where PM Abe held a meeting with BOJ Deputy Governor Nakaso and Finance Minister Aso. The PBoC's first fixing after the Brexit set the Yuan at 6.65, the lowest setting since Dec 2010. An intraday spike up above 6.70 sparked rumors that PBOC officials were willing to tolerate USD/CNY as high as 6.75.

Data for the week was mixed and ultimately overshadowed by the Brexit news in terms of any market-moving effect, but some key data points were notable. The US Markit services PMI report was a bit more subdued than estimated, noting any rebound in the economy from the weak first quarter was largely confined to April, and that growth has since faded again. The Commerce Department revised first quarter GDP growth upwards from an annual rate of 0.8% to 1.1%, which is still the weakest pace in a year, portending the US economy remains vulnerable to global externalities. On the other hand, the Chicago PMI reading surged in June to its highest reading since January 2015, with managers noting improved production and new orders. US initial jobless claims came in slightly above estimates but remained at a level consistent with a healthy labor market, as the reading remained below 300K for the 69th consecutive week. US consumer confidence rebounded in June according to the Conference Board; however, it's important to note this data was gathered up to a week before the Brexit vote.

In deal news this week, it was disclosed that Hershey was in talks with Mondelez but it rejected a $107/share offer of equally proportioned cash and stock and determined that the offer "provided no basis for further discussion." Nevertheless, shares of Hershey and other US foods producers rose sharply on Thursday on the prospects of more M&A in the sector. After years of winking at each other Lionsgate and Starz finally tied the knot, in a $4.4B merger deal creating a bigger player in the content world. Private equity also got into the act this week as Apollo Global bought Diamond Resorts for $2.2B, paying a 26% premium.

>>> Fed Vice Chair Fischer: was extremely surprised by Brexit vote; will have to

Fed Vice Chair Fischer: was extremely surprised by Brexit vote; will have to wait and see what outcome is for the economy - CNBC interview 
- will have to wait and see with regard to Fed tightening policy; the Fed makes decisions one meeting at a time
- doesn't see a huge difference for US economy because of level of direct trade with UK; it's more important for Europe
- US economy has done pretty well after very bad May employment data 
- will have to wait and see how quickly UK enters new trade agreements
- it's difficult to mull Brexit because it will unwind over a long timeframe
- Fed has no plans to move into negative rates, Fed would try to avoid that; can never say never to any potential policy
- negative rates seemed to work well initially, but lately there are some questions about how effective negative rates are

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: N/A

M&A news:
  • PKY +19.5% (to vote on merger with Cousins Properties (CUZ))
Select metals/mining stocks trading higher: SBGL +5.4%, GFI +4.7%, AU +4.5%, HMY +4.2%, SSRI +3.9%, PAAS+3.3%, KGC +3.1%, GOLD +3.1%, AUY +2.5%, AG +2.4%, SLV +2.4%, GDX +2.2%, NEM +2.1%, SLW +2%, HL +2%, ABX+1.9%

Other news:
  • ECR +7.2% (rebounding following recent weakness)
  • ARRY +6.5% (submits NDA for binimetinib in patients with advanced NRAS-mutant melanoma to the FDA)
  • WING +3.8% ( declared special cash dividend of $2.90/share to shareholders)
  • NFLX +3.6% (strength being attributed to 7Park Data - not confirmed)
  • SHPG +1.7% (continued strength)
  • VRX +1.7% (receives new licensing arrangement for Brodalumab in Europe)
  • LPG +1.4% (Pres/CEO disclosed purchase of 20000 shares, worth total of $147.9K )
  • ABBV +1.4% (receives FDA approval for HUMIRA for treatment of non-infectious intermediate, posterior and panuveitis)
  • BP +1% (announces final investment decision to expand Indonesia's Tangguh LNG facility)
  • RYAAY +0.9% (to seek approval from Shareholders to engage in further share buybacks over the next 15 months)
Analyst comments: N/A

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • MU -9.2%, (also announces restructuring plan, expects to incur charges of $70 million)
  • FC -2.5%
Select Semi conductor names showing weakness in sympathy with MU: ARMH -2.4%, WDC -1.8%, ASML -1.5%


Other news:
  • CJES -10.3% ( announces agreement in principle with its secured lenders on the key aspects of a proposed restructuring transaction)
  • CVRR -7.1% (provides update on Coffeyville refinery operations; Rates still below normal due to Magellan pipeline issues)
  • ARNA -6.4% (announces strategic shifting of priorities, will reduce workforce by 73% )
  • OSUR -6.1% (OraSure and AbbVie (ABBV) terminate their master program services and co-promotion agreement for the OraQuick HCV Rapid Antibody Test in the US)AXAS -4.4% (Abraxas Petroleum confirms filing of $200 mln universal shelf Registration Statement, files acquisition shelf Registration Statement on Form S-4)
  • TSLA -2.3% (reports of NHTSA investigation following a fatal-crash while a car was being operated in self-driving mode),TSRO -1.7% (prices offering of 4,650,000 shares of common stock at an offering price of $81.00 per share)
  • MBLY -1.6% (reports of NHTSA investigation following a fatal-crash while a car was being operated in self-driving mode)
  • BHP -1.6% (Superior Court of Justice in Brazil issued an interim order suspending the decision of the Federal Court of Appeal to ratify the Framework Agreement from Nov 2015),
  • VALE -1%
  • RIO -1% (may be in sympathy with BHP)
Analyst comments:
  • SCTY -1.9% (downgraded to Neutral from Outperform at Credit Suisse)
  • SWKS -1.4% (downgraded to Neutral from Buy at Mizuho)
  • QCOM -1.1% (downgraded to Hold from Buy at Evercore ISI)

(Washington Post) The rocks on Mars suggest it used to look like Earth. What hap

The rocks on Mars suggest it used to look like Earth. What happened?


A vast shallow sea shimmered beneath oxygen-rich skies. The rocky crests of cliffs and hills reflected in the still water below. The landscape would have been familiar, except for its eerie desolation; nothing on the entire planet moved but the sands shifting in the wind.

This was Mars, circa maybe 4 billion years ago. Or at least, it's one vision of Mars painted by Nina Lanza, a researcher at Los Alamos National Laboratory in New Mexico. In a study published this week in the journal Geophysical Research Letters, she and her colleagues argue that the discovery of manganese oxide (which forms in wet, oxygen-rich conditions) on the Martian surface suggests that the planet was once much more Earth-like.

[Mars may have been carved up by massive ancient tsunamis]

Now, of course, Mars is a frozen, barren wasteland, covered in dull red rock that's been bombarded and twisted into strange formations. Another study of the geology of Mars (this one published Thursday in the journal Science) suggests that a particular kind of formation — a ripple in the sand that forms only in Mars's current thin, arid atmosphere — can be found in fossilized form going back 3.7 billion years.

These two studies seem to bracket an important and confusing period in Mars's history: the period when the planet started losing its atmosphere, and thus its ability to hold onto liquid water.

"Really the question again comes back to, 'How fast did it get thin, when did it get thin, and why?'" said planetary scientist Christopher Edwards of the U.S. Geological Survey. These studies "are placing a constraint on that, which is great."

For years now, scientists have been building a body of evidence that Mars looked very different in its distant past. There are features on the Martian surface that can only form in the presence of large bodies water: traces of ancient tsunamis, clays at the bottom of vanished lakes. A 2015 study analyzing the ratios of two types of water molecule on Mars concluded that at one point the planet had an ocean covering 20 percent of its surface.

Lanza's study adds to that body of work. She and her colleagues were analyzing rock data collected by the Curiosity rover when they saw the tell-tale signs of an unexpected compound: manganese oxide. On Earth, that substance is found only in rock layers younger than the first photosynthetic organisms, because it can't be created without oxygen.

Curiosity detects compounds like managnese oxide with its Chem Cam instrument: It uses a laser to vaporize rock, transforming it into a cloud of elements that are glowing at particular wavelengths. A spectrometer inside the instrument "reads" the light, allowing scientists to determine what substances it contains.

The manganese oxide appeared in a context very similar to how it's usually found on Earth: in subterranean deposits left by groundwater that were later exposed as the rock around it eroded. That makes sense, Lanza said, because manganese deposits are "always going to be the result of dissolved igneous rocks in water." She believes that the manganese was dissolved in water that interacted with an oxygen-rich atmosphere, then was deposited as manganese oxide.

"It's sort of mysterious. But it's a very strong indicator of two things: liquid water, lots of of it, and a strong oxidant somewhere," Lanza said. "We know that doesn't happen on Mars today, so that opens up the question of, was there actually more oxygen in the atmosphere in Mars's past?"

"We don't know how that could have been true," she continued. "But these deposits are suggesting that it could have been."

That's a bold claim, because scientists have no evidence of how Mars could have gotten such an oxygen-rich atmosphere — on Earth, our oxygen came from photosynthesis, and that clearly wasn't happening on Mars. Other geologists suggested Lanza may have overlooked an alternative explanation: another oxidant, perchlorate, could be behind the manganese oxide.

But Lanza said that the oxygen might have been released from Mars's ancient oceans. As its atmosphere got thinner, the increased solar radiation that blasted the planet could have broken apart water molecules into their constituent elements: hydrogen, which would have drifted away, and oxygen.

Exactly why the atmosphere was lost is still a mystery — perhaps it was eroded by solar wind or blown away in a catastrophic asteroid impact. Or maybe Mars, with its low gravity, was simply unable to hold onto it.

Whatever the explanation, the fossilized ripples examined in Thursday's Science study offer a potential deadline for that transition.

Mathieu Lapotre, a planetary geologist at CalTech who was the lead author on the study, was studying pictures of modern Mars's dunes taken by Curiosity when he noticed they took a form rarely seen on Earth. In our atmosphere, sand is shaped by wind into centimeter-scale ripples and hundred meter-scale dunes (scientists call these features "bedforms"). But Mars also hosted an intermediate bedform — ripples with wavelengths roughly a meter long.

Analysis of the ripples showed that they can form on the Martian surface because of its thin air; the light atmosphere causes winds to move across the sand differently than they would on Earth.

"That in itself is a cool implication because there is this new alien bedform that does not exist on Earth," Lapotre said.

But it could also inform the discussion about Mars's transition to a dry, airless world. The intermediate-length ripples were found hardened in a rock formation believed to be as old as 3.7 billion years, suggesting that Mars's atmosphere was already thin at that point.

"We're looking at rocks younger than the rocks that the manganese study looked at," Lapotre said. "Those two outcrops probably bracket the decline in atmospheric density."

"This is the period that everyone is trying to understand," said Edwards, who was not involved in either study. What happened on Mars has no parallel on Earth, so it's going to require a lot of analyzing ancient Martian rocks to reconstruct.

"I don't think we have fully worked out the details," Edwards said. "But we're on a path to understanding."

Read More:

How NASA’s Juno mission could help tell us where we came from

Mars beckons in NASA’s new recruitment posters

Could this ‘Mars Base Camp’ really send astronauts to the Red Planet in 2028?

Food grown in fake Mars soil probably won’t kill you

FT : London property deals worth more than £650m collapse after

London property deals worth more than £650m collapse after Brexit - http://on.ft.com/29axBGa

More than £650m of commercial property deals in the City of London have collapsed following the UK’s vote to leave the EU, including the proposed acquisition of a landmark office block by Germany’s Union Investment.
The German fund manager had been in advanced discussions to buy Cannon Place, a 389,000 sq ft office scheme on Cannon Street in the City, for about £465m from Hines, the US property developer, according to three people familiar with the talks.

The investment group this week pulled the deal — which would have been one of the largest in the UK this year — after last Thursday’s referendum resulted in a vote for to leave the EU, the people said.
Several other London office deals also fell through following the Brexit vote, including the £190m purchase of 1 Wood Street, the London headquarters of the law firm Eversheds, by KanAm, another German real estate investor, according to property agents.
Smaller deals were also called off, such as the £20m purchase of 1 Chancery Lane, a building home to barristers’ chambers, by a Spanish private investor.
Ciaran Carvalho, head of real estate at Nabarro, the law firm, said that the deals being suspended or cancelled were mainly those involving London offices given worries that financial services companies might relocate staff elsewhere in Europe after Brexit.
“There was a sense for many investors that it would be irresponsible to proceed regardless, without taking stock,” he said. “Things are happening so fast that people need some time out. They need to re-evaluate.”
Union Investment declined to comment on Cannon Place, but a spokesman said that it retained confidence in the UK, where it owns more than £1bn of real estate, as a “safe haven market”.
“The Brexit is the announced black swan. But when the dust has settled, we will see that the UK will not go away as a safe haven market . . . in the end we still want to invest in the UK,” a spokesman said.
He added that the company would “recalibrate our strategy in the UK, staying cautious”. “We will not do speculative things for a while, but existing properties with a good leasing situation are possible,” he said.

Britain’s vote to leave the EU has also raised questions about the planned sale by the Qatar Investment Authority (QIA) of One Cabot Square, an office building in Canary Wharf, which had been expected to raise about £450m.
The QIA received two offers for the building, according to two people familiar with the situation, but neither had been accepted and the property was now expected to be withdrawn from the market.
Investment into UK real estate almost halved in the first six months of 2016 from a year earlier, according to Cushman & Wakefield, the property agents, as the referendum loomed.
Investors spent £7.5bn in the period, down from £13.3bn a year earlier, with institutional funds in particular drawing back .
Private wealth remained active, however, and some agents are hopeful that the market could be stimulated by the weakening of sterling against other currencies that has made UK property comparatively less expensive for overseas investors.
A consortium preparing to bid for the Grosvenor House hotel in London, which includes the UK family office 3 Associates and Saudi investors, is accelerating its offer to take advantage of the currency shift, a person involved in the talks said.