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British Land Raises About $734 Million in Share Placing

Construction cranes are seen on the Leadenhall Building, also known as the
Construction cranes are seen on the Leadenhall Building, also known as the "Cheesegrater", left, a property being developed by British Land Plc, in London. Photographer: Simon Dawson/Bloomberg

March 12 (Bloomberg) -- British Land Co., the U.K.’s second-largest real estate investment trust, raised 493 million pounds ($734 million) in a share sale to spend on acquisitions and development. The stock fell the most in 16 months.

British Land sold 89.7 million new shares, equivalent to about 10 percent of its share capital, to institutional investors for 550 pence each, the London-based company said in a statement today. The REIT also announced the sale of Ropemaker Place for 472 million pounds, the third-largest office-property deal in the City of London financial district in five years.

The U.K.’s largest property companies, Land Securities Plc and British Land, are using their access to capital to invest in properties and developments at a time when smaller competitors are struggling to raise money. U.K. commercial real estate values fell for the 15th consecutive month in January, according to Investment Property Databank Ltd.

“Vendors are showing an increasing realism around values, with access to finance continuing to constrain many buyers,” British Land said.

British Land declined 25.5 pence, or 4.4 percent to 555 pence in London trading, the biggest drop since November 2011. The shares have risen 12 percent in the past 12 months, while the he FTSE 350 Real Estate Investment Trust Index has climbed 13 percent. The company has a market value of 5 billion pounds.

Acquisition Funding

The money raised from the share sale will be used to pay for recent transactions, deals that British Land is negotiating and future purchases. The company said some of its rivals are trying to withdraw from the U.K. property market, increasing its investment opportunities. Last month, British Land bought London properties including the Ealing Broadway Shopping Centre from Werldhave NV for 183.8 million pounds.

Ropemaker Place will be bought by a group of French and Far Eastern investors represented by AXA Real Estate Investment Managers. The property was valued at 455 million pounds at the end of September and British Land will receive net proceeds of 461 million pounds in cash, the statement showed.

After the Ropemaker Place transaction, half of British Land’s real estate will be in the City of London financial district and the rest in the West End, the company said.

The building’s offices are fully occupied with an average lease of 14 years, British Land said. Tenants include Bank of Tokyo-Mitsubishi UFJ, Liberum Capital Ltd. and Macquarie Group Ltd.

The largest office-property deal in the City of London since January 2008 was the acquisition of a building on Bishops Square for 557 million pounds by two funds run by J.P. Morgan Asset Management, according to data compiled by Cushman and Wakefield Inc. The second-biggest was when Brazilian billionaire Moise Yacoub Safra paid 477 million pounds for Plantation Place near the Lloyd’s of London building.

To contact the reporter on this story: Andrew Blackman in Berlin at ablackman@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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