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November 14, 2012 11:26 pm
Great Portland Estates (GPE), the West End property developer, has raised £140.6m through a share placement that will enable it to seek more acquisitions in some of the capital’s most coveted postcodes.
The London-focused group increased its available cash and unspent credit facilities to £400m, after placing more than 31m new shares at 450p each on Wednesday.
“The conditions in the market are such that, in the bit we like to operate in ... we’d like to have some more firepower so that we can increase our exposure to it,” explained Toby Courtauld, chief executive.
He said the placing had been spurred by opportunities to buy assets valued between £25m and £100m in the mid-scale London property market.
GPE is currently in “active discussions” to buy three properties with a total value of £110m, and Mr Courtauld said there were several more that the company was interested in. Its West End acquisitions since March have totalled £159m, including the French Railway House, a mixed office and retail space near Piccadilly.
“The market has got bigger for us,” he said, noting that the group now targets larger properties in attractive locations, but where rents can be below the market average as they require refurbishment. Hanover Square, off London’s Oxford Street, is one of the sites GPE plans to develop in the next few years.
Mr Courtauld added that competition for such properties was “not as extensive as you might think”.
He said competition was more intense at the top end of the market, where sovereign wealth funds and high net worth individuals were among the “trophy hunters”.
However, he said the company was still exposed to the risks that come with making property acquisitions in weak macroeconomic conditions.
Along with other property companies, GPE has been moving away from relying on bank finance for deals. Having raised $200m in the US private placement market in May, bank finance now accounts for less than half of the group’s debt.
GPE’s portfolio valuation increased 4 per cent in the six months to September 30, driving up its net asset value per share by 5.2 per cent to 424p in the period.
The group’s revenue was up slightly to £33.4m, but pre-tax profit dipped to £76.7m from £79.1m in the first half of last year, reflecting the cost of its ongoing development projects.
The company announced an interim dividend of 3.3p, an increase of 3.1 per cent.
The shares closed down 1.3p at 458p, an 8 per cent premium to net asset value per share.
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