British Land has tapped shareholders for £740m in a fully underwritten rights issue as the company secures its balance sheet from further falls in property asset values.

The company announced the issue alongside a £1.64bn writedown in the third quarter following a 13 per cent reduction in its property portfolio valuation.

“We’re doing it [the rights issue] for two reasons,” Chris Grigg, chief executive, said on Thursday. “One is to ensure that we’re in a very strong balance sheet position. The second is so that over time we can take advantage of [future buying] opportunities as we see them.”

The rights issue will create two new shares at 225p for every three shares, a 53 per cent discount to Wednesday’s closing price. It is fully underwritten by Morgan Stanley, UBS and Euro Lights Private, an affiliate of GIC Real Estate, the Singapore government’s property investment arm.

News of the rights issue comes three days after British Land’s sale of the Meadowhall shopping centre in Sheffield for £588m to London and Stamford, and the announcement by rival Hammerson of a £584m equity-raising.

The money raised will allow British Land to access about £3bn in undrawn credit lines. The company has drawn down £900m of its banking facility and said that, following the rights issue and the sale of Meadowhall, this would be reduced to £100m.

British Land reported a 13 per cent fall in its property portfolio valuation and a corresponding increase in pre-tax losses. The revaluation brought net asset value per share down to 718p, a 31 per cent fall on the same period last year, when NAV was £10.43.

For the three months to the end of December, pre-tax losses rose 22 per cent to £1.6bn – heavily dented by the £1.64bn writedown – on gross rental and related revenues that dropped 14 per cent to £137m.

The loss per share grew 21 per cent compared with the same period last year, to 312p. Underlying pre-tax profit fell 13 per cent in the quarter to £63m. Shares in British Land closed down 27p at 456¼p.

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