Green Property is to raise £60 million after expenses in a rights issue to help fund development programmes in Ireland and Britain which are expected to cost more than £100 million.
The issue, which is fully underwritten by the Investment Bank of Ireland, involves an offer of two new shares at 350p per share for every seven shares held. Shareholders have until December 17th to accept the offer and pay for the shares.
Some 17.6 million new Green shares will be issued, bringing the total Green shares in issue to 79.3 million. The issue will raise a total of £61.7 million before expenses, which account for 2.76 per cent of the funds raised.
The 350p share price is a 60p, or 14.6 per cent, discount on Green's closing price of 410p on Monday. Green managing director, Mr Stephen Vernon said the company decided to have the rights issue fully underwritten rather than offer a "massive discount" on the shares. But he said he expected a strong take-up of rights from shareholders. The fund-raising is aimed at allowing the company to continue its development programmes in Ireland and Britain while maintaining its gearing - borrowing as a percentage of shareholders funds - in a target range of around 100 per cent.
About one-third of the funds are expected to be spent in Ireland with the balance going on British developments, though Mr Vernon said he expected the pace of future development to be faster in Ireland than in the British market. The board has advised shareholders that its development projects have the potential to provide "exciting returns". But because the estimated expenditure involved - more than £100 million - would push gearing above target levels and limit further investment opportunities, it decided to raise additional funds from shareholders.
A combination of the new funds, retained profits for the current year and an expected surplus on the revaluation of assets would ensure that gearing was kept at around the 100 per cent level while development continued, Mr Vernon said.
Results for the current year are expected to be "very satisfactory" against a background of strong property markets in Ireland and Britain while Green's current net asset value per share is estimated at around 315p compared with last year's level of 274p. The company yesterday announced that shareholders were to get a second interim dividend of 3.5p per share for the year to the end of December 1997 in lieu of a final dividend. This will bring the total dividend for the year to 5.3p per share, an increase of 15 per cent on the 1996 payment to shareholders.
Green's development plans for 1998 in Britain include four office developments in south-east England - in Epsom, Guildford, Reigate and Watford - and industrial developments in Chingford, Crayford and the Treforest Industrial Estate in Cardiff. In Ireland, Green plans to continue its development at Blanchardstown, bringing a further 31 acres on-stream following the completion this year of the second phase of the Blanchardstown Centre development.
In addition, the development of a 100-acre industrial park at Fonthill Road in Dublin will continue and a factory outlet centre in Killarney, Co Kerry will be developed. The company is at an advanced stage in negotiations to buy out the interests of its joint venture partner in a number of developments, GE Capital (Properties). Mr Vernon said this deal would close in January but he was not prepared to disclose details at this time. In the past year, Green acquired a property portfolio in Britain for £68.5 million sterling and an investment property in Blanchardstown for £8.25 million. It has completed the second phase of the Blanchardstown Centre which includes a 78,000 sq ft retail park. At the end of June the company's gearing was 100 per cent.
