US Edition The London-listed company which rents property to small businesses, said it would raise £87.2m - nearly double its market value - in what is expected to be the first of many capital raisings from companies desperate to reduce their debt.
Investors said they are braced for a wave of rights issues in the next few weeks as companies race to secure cash while the option is available. Experts have warned that demand for funds will far outstrip the amount available.
Other property firms examining possible fund raisings include Liberty International, the shopping-centre landlord, and British Land. Both companies became Reits when the structure was introduced in January 2007 to boost tax efficiency in the property sector.
Workspace, whose shares have fallen by over 90pc in the past 12 months, said the new capital would extend its lending agreements until November 2012 and so "reduce the level of risk associated with the group's debt facilities."
Under terms of the Workspace deal, new shares will be offered to shareholders at 10p a share on the basis of five new ordinary shares for each existing share. Workspace shares closed 4½ lower at 28p.
N M Rothschild and Panmure Gordon are joint advisers who said the rights issue is fully underwritten.
Tony Hales, chairman of Workspace, said: "In the context of the current financial climate, where the perceived outlook for property values has been gloomy, obtaining capital and bank financing has been very tough. We can now focus all of our efforts on the operational performance and cash generation of the business in this challenging economic environment."
Workspace said the value of its portfolio tumbled 15pc to £740.3m in the three months to December 31, but its rent roll remained stable during the period while rental income per square foot rose.