Land Securities has confirmed it is considering the “merits” of a significant rights issue – the latest in a round of equity raisings by property companies to prop up their balance sheets.
In a stock market announcement today, LandSec said: “The board confirms that discussions have been held to consider the merits of a rights issue and any decisions will be communicated to shareholders through the proper channels at the proper time.“
Press reports over the weekend said Land Securities was in the final stages of approving a cash call of between £500m and £750m, with the board expected to meet this week.
The rights issue will be underwritten by UBS, Cazenove and Citigroup.
Nomura Real Estate analyst Mike Prew said: “REITs are hogging the rights issue arena, and we expect Land Securities to top the league table with the biggest issue in coming weeks.”
So far, British Land has announced the largest rights issue at £740m, with Hammerson also revealing that it will raise £584m, and Workspace £77m.
Both British Land and Hammerson’s share prices tumbled following the British Land announcement.
Prew said he believed the first rule of rights issues is “never to disappoint an audience” and this may have been what British Land did.
“The market was looking for a direction for the business but, instead, it appeared to promise more of the same,” he said. “It was almost inevitable that British Land shares would give back any ‘hope value’ from the new chief executive’s appointment, the disposal of half of Meadowhall, and expectation of a rights issue relief, which may have been built in.”
