Hammerson Rights Issue Focuses City on Real-Estate Sector and Its Need for Equity

Article excerpt

All eyes will be on real-estate developers including British Land and Liberty in coming weeks to see whether they make cash calls to the market after their rival Hammerson became the first major UK property company to seek emergency funding.

British Land, which announces results on Thursday, is considering a similar cash call, and Liberty International is considering coming to the market for as much as 350m, according to people with knowledge of the situations. Both companies declined to comment.

Tumbling property prices, a slump in mergers and acquisitions and reluctance from banks to lend cheaply will push many others to raise equity.

"The real-estate sector needs equity badly," one investment banker said.

Hammerson, which specialises in UK and French retail property investment, announced plans for a seven-for-five, fully underwritten rights issue yesterday, which is set to raise 584m. The offer represents a 62.2 per cent discount to Friday's closing price of 397p per share.

Hammerson's rights issue follows thwarted attempts to sell assets to raise new funds which had left its financial covenants vulnerable to being breached. The FTSE 100 company said the fundraising would slash its gearing to 81 per cent from 118 per cent, comfortably below a 150 per cent limit. …