Landlord seeks to raise £1bn for future investment

The landlord, which owns a number of shopping centres across Yorkshire, said the placing of about 10 per cent of its shares, plus the sale of a London skyscraper, will fund investment opportunities.

The company placed 89.7m new ordinary shares at 550p each, representing 9.99 per cent of its existing share capital.

It plans to use £213m to fund recent acquisitions and £150m for deals in advanced negotiations.

The company also said it sold Ropemaker Place, a 593,000 sq ft office block whose tenants include the Bank of Tokyo-Mitsubishi UFJ, for £472m to a consortium led by AXA Real Estate.

It plans to use the proceeds to fund “attractive investments”.

British Land, headed by chief executive Chris Grigg, said it has a significant pipeline of targets in its core sectors in London and the South East

“The company believes that this placing will provide it with additional investment capacity, enabling it to capitalise upon its scale and financial strength to drive future growth in earnings and returns,” it said.

The company’s shares fell 4.4 per cent yesterday to close at 555p, but are up 12 per cent over the year.

British Land owns half of Sheffield’s Meadowhall shopping centre, and has other assets in the region including St Stephen’s shopping centre in Hull, Parkgate in Rotherham, Forster Square Shopping Park in Bradford and Westgate Retail Park in Wakefield.

British Land said while it will continue to “recycle capital from mature assets into growth-enhancing investments” its desire to raise cash was driven by a “clear acceleration in the flow of opportunities” it has seen in its key office and retail sectors in recent months.

“Many of these opportunities are being driven by structural changes, as institutions reconfigure their property holdings and smaller competitors look to exit the UK market,” it said.

“In addition, the company believes that vendors are showing an increasing realism around values, with access to finance continuing to constrain many buyers.”

British Land earned a five per cent net initial yield on the sale of Ropemaker Place. It will generate £461m after expenses, 1.4 per cent above its book value in September.

British Land said it has undertaken about £1.5bn of gross investment activity over its latest financial year.

Landlord Hammerson, which owns Leeds’ Victoria Quarter and is developing the adjacent Eastgate Quarters, recently said it “continue(s) to seek opportunities to enhance the scale and efficiency of our business through further acquisitions”.

British Land’s announcement comes after rival shopping centre owner Intu Properties launched plans to raise cash from shareholders to fund a £250.5m deal to buy the Midsummer Place shopping centre in Milton Keynes, near London.

Property investors in Europe are casting an eye over riskier assets and are keen to spend after years of caution as concerns over the eurozone ebb, property consultant CBRE said last week.