Segro, Brixton considering equity raisings

UK industrial property firms Segro and Brixton confirmed on Wednesday they are both considering a range of options, including equity raisings, to shore up their balance sheets.

The two companies were responding to speculation that they would be the latest major UK real estate investment trusts (REITs) to raise capital with a rights issue. On Tuesday, Brixton's shares dropped 28% and Segro's 18% in response to fears that any rights issues, which come hard on the heels of similar plans from the three largest UK REITs, Land Securities, British Land and Hammerson, will fail. The trio are seeking more than EUR 2 bn in total from shareholders.

An additional difficulty for Segro and Brixton is that their concentration on industrial properties may not be as appealing to investors as the office and retail portfolios of their peers.

Segro said it was assessing all financing options including equity issuance but had made no decisions on how to proceed. Brixton said: 'Given the ongoing challenging market conditions in the real estate and financial markets, the board of Brixton is pursuing a range of options to provide additional financial flexibility, including disposals from its investment portfolio, as well as considering an equity raising. No decision on any course of action has been taken at this stage.'

On Wednesday, Segro rose 1.36% in midday trading to 111 pence, while Brixton was down by 11% at 42.5 pence.

Land Securities, the largest UK REIT, confirmed earlier this week that it is considering a rights issue. The news was in response to media reports that the firm intends to raise up to £750 mln (about EUR 836 mln) from investors to pay down debt.

British Land and Hammerson, two other large UK REITs, have already unveiled underwritten capital raisings. British Land said last week that it planned to raise £740 mln (EUR 823 mln) net of expenses in a 2-for-3 rights issue. Days earlier, Hammerson revealed it intended to raise net proceeds of £584 mln (just under EUR 670 mln) in a fully underwritten 7-for-5 rights issue.