Sept. 18 (Bloomberg) -- British Land Co., the U.K.’s second-largest real estate investment trust, plans to spend about 1 billion pounds ($1.6 billion) on property purchases after selling 50 percent of its biggest asset.

The sale will strengthen British Land’s balance sheet and allow it to make acquisitions as the market recovers, Chief Executive Officer Chris Grigg said on a conference call with reporters today. British Land has been trying to become less dependent on large, single assets for its rental income.

British Land agreed to sell half of Broadgate, which has about 2 billion pounds of securitized debt, to Blackstone Group LP, according to a statement today. Blackstone will pay 77 million pounds for the stake in the office complex, the largest in London’s main financial district, and assume 987 million pounds of the debt.

“We’re thinking in terms of investing something like 1 billion pounds over the next stage of the cycle, and frankly our capacity is substantially greater than that,” Grigg said.

British Land is evaluating “a number” of U.K. acquisitions and is about to buy a retail park in the north of England, Grigg said. The REIT plans to be “opportunistic” and is in talks with banks about potential transactions, he said.

“We think of this as being asset-specific rather than sector-specific,” Grigg said. “We’ll look to opportunities as they arise.”

British Land’s stores will account for 65 percent of its properties following the sale of the Broadgate stake, while the rest will mostly be office buildings. About 21 percent of the offices will be in the City of London financial district.

“The company now needs to show what it can do with the money that’s sloshing around its balance sheet,” said Harry Stokes, a London-based analyst at Evolution Securities Ltd. with a “reduce” rating on the stock.

To contact the reporter on this story: Chris Bourke in London at cbourke4@bloomberg.net.

Last Updated: September 18, 2009 07:21 EDT