British Land has brought in £965m through a share placing and a property sale, in a major fund-raising exercise. The move reduces British Land’s gearing from 46% to 41% and will fund acquisitions and developments.
The company raised £493m of new equity at 550p per share, a 5% discount to the price just before the issue and 8% under its September 2012 net asset value. The issue represents 9.9% of the existing share capital. The proceeds from the placing will be used to fund a number of acquisitions.
British Land is buying Wereldhave’s £180.8m London portfolio, including Ealing Broadway Shopping Centre; and the £33m Hempel hotel, also in London, which, with another British Land site, will create a £125m residential project. British Land has another £150m of transactions under negotiation.
A further £472m was raised from the sale of Ropemaker Place, its multi-let City office building, to AXA-led consortium Frasia. The price reflects a 5.0% yield and is a 1.4% premium to the property’s September 2012 valuation.
The sale is in line with its strategy of recycling capital and balancing its portfolio between the West End and the City, British Land said. The proceeds will be ploughed back into the company’s London- focused development programme, which has an average expected yield on cost of 8.5%.
British Land said that in the three years to September, it earned a 30% unleveraged internal rate of return on committed developments and 9% on acquisitions, on the £2bn it invested in those assets.