Property duo head for cash-call queue
Industrial landlords Brixton and Segro today looked set to join the growing list of property firms to ask shareholders for extra funding as the crisis paralysing the industry deepened.
Commercial property: Values are down 40% from the 2007 peak
However, with rivals such as British Land, Land Securities and Hammerson also looking to raise billions of pounds from investors, fears are mounting that not all the companies will get the money they need, sending the shares into freefall in recent days.
Developers and landlords are desperate to raise funds to ensure they do not breach debt covenants as property prices tumble. Values are down 40% from their 2007 peak.
Brixton, owner of warehouses around Heathrow and at Park Royal in west London, said it was looking at 'a range of options' to raise funds 'including disposals from its investment portfolio as well as considering an equity raising'.
Segro, formerly Slough Estates, said it is 'assessing all financing options including equity issuance but has made no decisions'.
Shares in Brixton yesterday crashed 28% to 48p but were today up 1¾p to 49¾p. Segro yesterday fell 18% from 134¾p to 110p, and was off 1¾p at 108¼p today.
Richard Curr at City trader Blue Index said both firms were 'in crisis'.
He added: 'Dealers are concerned over the ability of both groups to raise capital in the market, and whether both will be able to get potential issues underwritten.'
Hammerson and British Land last week announced plans to raise £584m and £740m through rights issues.
Land Securities is expected to launch a £750m fundraising tomorrow, and pressure is mounting on Liberty International to shore up its balance sheet.
Shares in office landlord Workspace, the first property firm to go to the market for funds when it launched an £87m rights issue last month, yesterday sank below the 10p underwriting price. They were today up 0.35p at 10.25p.
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