British Land set the sector alight this week with the news that it is establishing a £500m property fund with money man George Soros. In addition, the company is raising £132m net with a 4-for-17 rights issue at 245p.
The new fund, which will be called British Land Quantum Property Partnership, will concentrate on opportunities in the UK, where British Land considers there will be superior medium-to-long-term returns offered.
“We think this enables us to buy some quite large things,” says British Land finance director John Weston Smith.
Each party is putting in £250m and Soros’ fund, Quantum, is taking up 11.3m of new British Land shares at 289p, for a total £33.7m. This gives Quantum a 4.8% stake in BL.
“We thought it would be a good idea to get an overseas investor and John Ritblat wrote to Soros. He was a target,” says Weston-Smith. “It was a good letter.”
Soros, a financier who made a £1bn killing in currency deals during the ERM chaos last autumn and has recently been betting on gold, has been taking an interest in real estate. Last year, he set up Soros Realty in the US and he has hired former O&Y chief Paul Reichmann.
British Land is the fourth major property company to raise funds in the past four weeks, following Land Securities, Brixton and Hammerson. The company increased its pretax profits 4% to £34.6m in the year ended March 1993, while net asset value per share has fallen 19p to 307p.
