Land Securities is latest property company to announce rights issue

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by Kay Mitchell

As the housing market continues its slowdown as a result of a lack of mortgage funding and falling property prices, Land Securities is the latest property company to announce a rights issue.

The company, which is Britain’s largest property organisation, is to embark on a £755.7 million rights issue and follows on from a £740 million rights issue from British Land and a £584 million fund-raising exercise from Hammerson.

In a bid to shore up its balance sheet, Land Securities will issue shares at 270p, a heavily discounted 52% against yesterday’s closing price of 568p.

The rights issue is fully underwritten by Citi, JP Morgan Securities and UBS.

Smaller property firms including Segro, Brixton and Liberty International are all expected to announce further rights issues within the next few days.

The downturn in the property market has been emphasised by the fact that Land Securities-portfolio of properties lost over £2 billion in value in the final three months of 2008 – a 20% decline.

In a statement today, Francis Salway, chief executive of Land Securities, said “We have a good track record of creating value for shareholders through the property cycle and have decided to seek further capital at this stage to ensure that the company’s balance sheet is appropriately structured.

This will help protect the business against the downside risk of further falls in property values and thereafter position the business to exploit attractive market opportunities.“

Meanwhile, the group is to slash its dividend from last year’s 64p to just 28p this year.