British Land has sold its Ropemaker Place development in London for £472 million to raise capital to buy several new office properties. The sale is part of the company’s efforts to accumulate nearly £1 billion it needs to take advantage of the growing number of office and retail properties that are coming onto the market.
The company is raising an additional £500 million from its shareholders by putting 89 million shares, which represents 9.9 per cent of the company up for sale. Analysts are predicting the price is likely to be around 558p a share. Prices have fallen by 17.5p to 563p in the wake of the news.
The company has stated, “In recent months [we have] seen a clear acceleration in the flow of opportunities … Many of these are being driven by structural changes, as institutions reconfigure their property holdings and smaller companies look to exit the UK market.
“In addition the company believes that vendors are showing an increasing realism around values, with access to financing continuing to constrain many buyers. These factors have been important features behind many of the company’s recent acquisitions, such as the Clarges Estate in Mayfair and Wereldhave’s London portfolio.”
The funds will be used to pay for £213 million in new office space the company has recently bought. It will also help to fund another £150 million of properties currently in negotiation.
British Land is the latest in a slew of property companies raising cash to fund its expansion efforts. Intu Propertiers, a rival shopping centre owner, has recently announced plans to ask its shareholders for funds which will be used to buy the Midsummer Place centre in Milton Keynes.
Alan Carter, an analyst at Investec, has noted that British Land’s track record has been quite good, which is why the company’s prospects from acquisitions seem reasonable. He pointed out that the Ropemaker Place sale will complete the rebalancing of the London office portfolio to half and half between the City and the West End, which always been the company’s goal.
