GREAT PORTLAND Estates yesterday announced it had raised £140.6m from a placing of shares that will help fuel another shopping spree in London’s West End.
The London-focused developer, which already owns swathes of West End property, said it plans to use the proceeds to buy “unloved assets”, let on cheap rents which it can refurbish and boost the rental income from.
Chief executive Toby Courtauld said demand for property in Central London outweighed supply by more than four times, driven by overseas buyers flocking into the capital.
“Since the summer, we have identified an increasing number of interesting acquisition opportunities, predominantly liquid lot-size, complex properties let off low rents in the West End and which are difficult to debt finance,” Courtauld said.
“We expect to identify further such opportunities in the coming months,” he added. The group estimates that the number of buildings up for sale in the West End has doubled since May to £2.6bn.
The company, which now has £400m to spend on acquisitions, said it is in “detailed” talks to buy three properties with a value of about £110m, of which two are in the West End and the third in central London. It also has another three in the pipeline.
News of the share placing came as the company announced a robust set of half-year results, with its net asset value increasing by 5.2 per cent to 424p a share in the period to 30 September. Rental value grew by two per cent, driven by a 2.4 per cent growth in West End offices and a 2.7 per cent rise in West End retail.
Courtauld said: “Although the rate of leasing was below the long run average around the time of the Olympics, we are witnessing a solid pick-up in demand from prospective occupiers.”
Credit Suisse and J.P. Morgan Cazenove acted as joint bookrunners on the share placing while Lazard is a long-standing financial adviser to the property group.
The Credit Suisse team was led by UK chief executive James Leigh-Pemberton, who worked on Great Portland’s £175m fundraising in 2009. Leigh-Pemberton is the son of former Bank of England governor Robin Leigh-Pemberton. He first joined Credit Suisse First Boston in 1994 after 15 years at S.G. Warburg Securities. In 2009, he acted as main adviser to the government on the banking bailout and its aftermath. Stephane Gruffat, managing director of European equity syndicate and Tom Edwards-Moss, a director at the bank investment banking division worked alongside him on yesterday’s placing. J.P. Morgan’s team included Jonathan Wilcox, head of UK equity capital markets.