UPDATE: UK Property Cos Raise Over GBP1 Billion; Sign Of Confidence
23 Settembre 2009 - 6:13PM
Dow Jones News
U.K. property companies announced plans Wednesday to raise more
than GBP1 billion to strengthen their balance sheets and to build
war chests to fund acquisitions as evidence mounts that confidence
is returning to the real-estate sector.
House builders Barratt Developments PLC (BDEV.LN) and Redrow PLC
(RDW.LN) disclosed plans to raise more than GBP900 million through
rights issues and placements, while Liberty International PLC
(LII.LN), the country's largest industrial real-estate investment
trust, said it raised about GBP280.5 million through an issue of
new shares.
The capital hikes are the latest in a burgeoning trend that has
seen similar moves earlier this year by house builders Taylor
Wimpey PLC (TW.LN), Bovis Homes Group PLC (BVS.LN), Berkeley Group
Holdings PLC BKG.LN) and Bellway PLC BWY.LN).
The fund-raising moves were "a big vote of confidence" in the
residential market, said Andrew Frost, a partner and head of
residential valuation at U.K. property consultant King Sturge, who
added that the turnaround in the market in the past 12 months had
been "quite exceptional."
"It feels now like we have hit the bottom," added Tim Wright, a
partner at King Sturge's residential, mixed use and land team.
House builders have been struggling for more than a year with
the worst housing market conditions in decades. Mortgage financing
evaporated in the banking crisis, reducing the number of buyers to
a trickle and forcing house prices lower. As a result of falling
prices, the companies had to take write-downs on the value of land
and work in progress, and put developments on hold.
But signs continue to emerge to suggest that conditions in the
real-sector have eased.
Barratt Developments and Redrow, for example, both have reported
house prices had risen in the past few months, visitor numbers at
sales sites had increased and sales were up. "We have definitely
seen the market stabilize during the calendar year 2009," Redrow
Chairman Steve Morgan said.
U.K. house prices in August rose for the third time in four
months, while the annual rate of decline continued to ease, Lloyds
Banking Group PLC (LYG) said earlier this month. Its Halifax house
price index was up 0.8% from July, but down 10.1% from August,
2008.
"Demand for housing has increased since the start of the year
due to better affordability and low interest rates," said Martin
Ellis, Halifax's housing economist. "This, together with low levels
of property available for sale, has boosted house prices over the
last few months."
Still, gross mortgage lending in August was 13% lower than in
July, the Council of Mortgage Lenders said last week. "Underlying
lending levels appear to have stabilized during the summer, with
stronger lending for house purchase balanced by lower levels of
remortgaging," the CML said.
Those signs of stability have given executives the confidence to
prepare for growth. "We believe this is the right time to refinance
and recapitalize the business," Barratt Developments Chief
Executive Mark Clare said.
Barratt Developments announced a fully underwritten placing and
1.3-for-1 rights issue to raise gross proceeds of GBP720.5 million.
Clare said some of that would be spent to buy land this year in
order to maintain a land bank equivalent to at least
three-and-a-half years' work.
Barratt Developments on Wednesday reported a net loss for the 12
months to June 30 of GBP468.6 million, compared with a net profit
last year of GBP86.4 million, due to an "intensely difficult year"
in the U.K. housing market.
Redrow announced a rights issue to raise GBP156 million.
Proceeds from the rights issue will be used to reduce overall
levels of gearing by repaying and canceling up to GBP135 million
drawn under an existing syndicated facility agreement. It also
announced the proposed GBP15 million acquisition of the Harrow
Estates business, which focuses on identifying and acquiring brown
field land.
Redrow Chairman Morgan said the marketplace had shrunk in the
past seven or eight years but remained competitive. "The country's
need for new homes is greater than it has ever been," he said.
Industrial landlord Liberty International said it issued new
ordinary shares representing around 9.9% of its total capital,
raising GBP280.5 million, so that it can resume investment in its
prime U.K. regional shopping centers and central London assets.
Company Web sites: www.barratthomes.co.uk; www.redrow.co.uk;
www.liberty-international.co.uk
-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 8237;
jonathan.buck@dowjones.com
(Michael Carolan and Digby Larner contributed to this
article.)
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