British Land launches £740m rights issue

Published 12th Feb 2009

British Land is to raise £740 million through a rights issue, becoming the second FTSE 100 property company to call on its shareholders for cash this week.

Britain’s second biggest commercial real estate group said the proceeds of the fundraising - structured as a two for three offer at 225p, or a 53 per cent discount to Wednesday’s closing price - would “underpin the company’s balance sheet at a time of unprecedented market dislocation”.

Investors reacted favourably to today's cash call, sending shares in British Land up 5.5 per cent to 510p in early trading.

On Monday, Hammerson, the owner of London’s Brent Cross and Birmingham’s Bull Ring shopping centres, unveiled plans to raise £584 million through a rights issue, the first of what are expected to be a run of cash calls from its sector.

British Land’s rights issue accompanied the release of its third-quarter results, which revealed a 31 per cent fall in net asset value to 718p a share. The company had £4.7 billion of net borrowings at the end of last year, against yesterday’s stock market value of £2.5 billion.

Earlier this week, British Land sold a 50 per cent stake in the Meadowhall shopping centre in Sheffield for £587.7 million to London & Stamford Property and an unidentified partner, thought to be Cavendish, the Gulf investment fund.

That deal, which brought in an immediate £170 million in cash, suggested that Chris Grigg, British Land’s new chief executive, would move swiftly to relieve the strain on the company’s balance sheet. Mr Grigg succeeded Stephen Hester, who has drafted in by the Treasury to run Royal Bank of Scotland.

The rights issue is being fully underwritten by Morgan Stanley, UBS and the Government of Singapore Investment Corporation, an existing British Land shareholder. Investors will vote on the fundraising on March 3.

Shares in British Land rose 3 per cent in early trading to 495p, the biggest gain in the FTSE 100.

Source: ' Times '

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