LibInt on the ball

Johannesburg - Liberty International investors wasted no time in taking up new shares in yet another capital raising exercise announced by the UK shopping centre owner earlier on Wednesday.

The placement of 56.1m shares was fully subscribed within a couple of hours, sending a strong vote of confidence in the company's ability to weather the current real estate downturn.

The placing, which was done at 500 pence per share, raised £280.5m (R3.36bn) - 10% of the group's issued share capital. The placing price represents a discount of around 7% to the levels that the share price was trading at earlier on Wednesday.

The proceeds raised will be used to upgrade Liberty International's 14 regional shopping centres and finance new acquisitions. The massive slump that hit the UK property market some 18 months ago forced Liberty International to put all investment plans on hold.

It is the second time this year that Liberty International has gone to shareholders to raise funds. In April, the company raised £592m (R7.1bn), which was used to repay debt and fund already committed capital expenditure programmes.

Management said in a statement earlier on Wednesday that the latest share placement will restore positive momentum to Liberty International's overall business and further help strengthen the balance sheet.

The statement read: "It will provide funds for the group to improve the competitive position of its prime UK regional shopping centres through active asset management initiatives in the short-term and more substantial enhancement and expansion projects in the medium-term.

"The funds will also position the group to further consolidate and develop its holdings in the prime Covent Garden estate in Central London and enable management to actively pursue the development potential of other prime London properties such as Earls Court and Olympia."

Fund managers welcomed Liberty International's bold move to raise fresh capital on the back of improved market sentiment. Share prices of most UK property companies have rallied some 30% over the past three months, as signs of a turnaround in the global recession started to emerge.

Evan Jankelowitz, co-head of Stanlib's property franchise, said it was "smart" of management to do a share placement at a time when sentiment was on the mend. "One has to admire their corporate prowess."

Jankelowitz said the successful share placement underlines the fact that investors still regard Liberty International as a great long-term buy. "It has quality assets and a superb management team."

Even if it takes some time before the UK property market claws back the losses seen over the past 18 months, Jankelowitz believed Liberty International is now perfectly placed to benefit from a recovery in due course.

- Fin24.com