LONDON (Reuters) - Industrial real estate landlords Brixton BXTN.L and Segro (SGRO.L) are considering rights issues to shore up their stricken balance sheets as conditions in the property market worsen.
In separate statements on Wednesday, the companies said they were pursuing a range of options to provide financial flexibility but final decisions were yet to be made.
Segro shares were up 0.5 percent at 110.5 pence by 0939 GMT while Brixton was down 12 percent to 41.25 pence. The FTSE 350 Real Estate Index .FTNMX8730 was trading down 1 percent.
Brixton’s share price plumbed a new 52-week low on Tuesday, while Segro shares shed almost a fifth of their value on fears they would both need heavily discounted rights issues to protect loan covenant limits exposed by a near-40 percent fall in UK commercial property prices since mid-2007.
Negative market sentiment was compounded by concerns that institutional shareholders may be about to shut the window for rights issues in debt-starved real estate sector.
“The headlong charge to get through the (still slightly open) window is now in full swing and I fear that there will be more than a few casualties,” one analyst who requested anonymity, told Reuters.
Last week, fellow real estate investment trusts Hammerson (HMSO.L) and British Land (BLND.L) unveiled a combined 1.3 billion pounds of fully underwritten equity raisings to remedy their funding problems.
Some analysts fear investors have already had their fill of volatile property stocks.
“This also brings into question the value of the money raised by Hammerson and British Land — if the rest of the sector is now a forced seller of (prime) real estate where will values have to go to?,” the analyst said.
(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)
Editing by Erica Billingham