UK property firm Development Securities said on Thursday it had launched a £100.2 mln (EUR 119 mln) rights issue to raise proceeds for capitalising on new opportunities in the property development cycle. The placement comes amid a dearth of available bank financing and will enhance the company's investment portfolio where attractive asset management opportunities exist, the company said in a statement.
UK property firm Development Securities said on Thursday it had launched a £100.2 mln (EUR 119 mln) rights issue to raise proceeds for capitalising on new opportunities in the property development cycle. The placement comes amid a dearth of available bank financing and will enhance the company's investment portfolio where attractive asset management opportunities exist, the company said in a statement.
The rights issue will be made on the basis of 5 new shares for every 12 existing shares at 250 pence per share. Net proceeds are put at around £94.1 mln.
Development Securities raised some £94.0 mln in an equity raise in July 2009, of which £68.9 mln has been invested in a series of projects. These comprise a mix of development, refurbishment and investment assets, which are expected to generate substantial profits for the business over the next one to five years. In addition, the company has provisionally committed a further £51.1 mln and expects to have allocated the full £94.0 mln from the July 2009 issue by the end of the third quarter of 2010.
In June Development Securities announced it had acquired Westminster Palace Gardens in central London in a joint venture with Caenwood Ventures. The office, residential and retail premises were bought for £10.1 mln (EUR 12.3 mln), reflecting an income yield of 6.77%.
The company said it was continuing to evaluate further opportunities, including several potential development schemes in central London and regional locations. These are typically large sites involving extensive pre-development master-planning and infrastructure implementation, where Development Securities would seek to introduce equity partners before commencing significant works on site. 'At this early stage in the property cycle, and in view of the continuing wider economic uncertainty, there is sometimes a need for developers such as Development Securities to provide a higher level of equity commitment to developments than has historically been the case in order to participate in the opportunity,' the company said.
