Britannia Radio

Hammerson and British Land set to raise £1bn from investors

Two of Britain's largest property companies will this week announce plans to raise more than £1bn from investors, heralding what analysts expect to become a flood of rights issues from the battered sector.

 

By Mark Kleinman and Yvette Essen
Last Updated: 9:39PM GMT 07 Feb 2009

Hammerson, which owns the Brent Cross shopping centre in north London and a one-third stake in Birmingham's Bullring, is expected to unveil a rights issue tomorrow to raise around £600m.

It will be underwritten by Citigroup and Deutsche Bank, and is understood to have been warmly received in initial discussions with institutional investors.

British Land, which publishes its third-quarter results on Thursday, is also planning to confirm a rights issue worth about £500m this week, according to people close to the firm, although the details were yet to be formally decided last night.

Hammerson, which is led by John Richards, its chief executive, has seen its shares fall by about 60pc over the last year as the property sector continues to be among the worst hit during the recession.

British Land is also expected to announce plans for a series of disposals this week. These will include the sale of half of the company's stake in the Meadowhall shopping centre in Sheffield to a joint venture involving London & Stamford and an Abu Dhabi investment group.

It is also negotiating the sale of its Broadgate development in London to Delancey, the property investment firm headed by Sir John Ritblat, who is British Land's life president.Hammerson and British Land declined to comment last night.

It is thought that British Land is just one of a number of ailing property companies to be examining a sale of assets. Last month, Hammerson was rumoured to be considering a sale of Bishops Square and Land Securities was reported to be looking at disposing of its holding in The Bull Ring.

Goldman Sachs recently published a note on the sector, predicting large scale disposals are likely to be the key focus for 2009. It wrote: "The recent speed of deterioration in the UK commercial real estate market significantly increases the risks for a number of the UK REITs (Real Estate Investment Trusts) from simply sitting tight until the worst of the storm passes.

"The majority are likely to seek proactively to de-lever in our view, resulting in significant dilution in their cash flows. In this context, we believe that the REITs will focus their efforts to de-lever on disposals near-term.