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London office developer Great Portland Estates plans to raise £350mn in a rights issue to pursue “compelling new investment opportunities” as the commercial property market bottoms out.
Chief executive Toby Courtauld, who is known for his well-timed acquisitions after the 2008 global financial crisis, said: “We believe values are now at or around their cyclical trough and consequently, we turned net buyer during the year for the first time since 2013.”
The company said it had identified £1.4bn in near-term acquisition targets. Property values have slumped because of higher debt costs and nerves about office demand and flexible working.
The fundraise comes despite GPE announcing that the value of its £2.3bn portfolio of mostly London office and retail had dropped 12 per cent in the year to March.
But GPE said its vacancy rate had fallen to 1.3 per cent, from 2.5 per cent last year, due to intense demand for new office space, especially in the west end.
The FTSE 250 group, which is based on the historic estate of the Dukes of Portland, said property prices were bottoming out as interest rates in the UK stabilised.
Courtauld said: “We have seen a correction in asset values over the past 18 months with central London commercial real estate now trading in line with levels last seen in 2009 in real terms.”
The company said the capital raise would reduce its loan-to-value ratio to 18.2 per cent and give it £450mn in investment capacity.
Its move follows an oversubscribed rights issue by warehouse landlord Segro in February, which raised £900mn. GPE said it would publish a prospectus for the issue on Friday.
