Recently in Capital raising Category

EGTV talks to chief executive of British Land Chris Grigg, Lloyds Banking Group's Richard Dakin, Hammerson chief executive David Atkins and JP Morgan Cazenove head of real estate Robert Fowlds about their views for property's future.

Speaking from the EG Investment Summit at the King's Fund in London today, the four outline the future of their companies, investment in the sector, and which markets are attractive - or not - to investors and developers in the current economic climate.

This past weekend, media have picked up on stories published in early June (see our EGi article) stating that Canary Wharf Group looks set to partner Land Securities at its Walkie Talkie office building in the City.
While that piece of information is nothing new, analysts at JPMorgan Cazenove say it now looks like the deal is more certain.
Canary Wharf Group - which is 69% owned by Songbird - will provide construction services to the project, according to reports.
"We would see such a potential JV as a positive for both Land Securities and Songbird," said JPMorgan.
"The main positive for Land Securities being that it could start another (speculative) office project with an experienced JV partner.
"As we said before, Land Securities is gearing up its development pipeline and putting money where its view is (which we welcome)."
What does seem new from these reports is that China Investment Corporation has approached Land Secs to take a 25% stake in the Walkie Talkie - see article here.
"We already note that CIC has an indirect stake in the building as it holds around 15% of Songbird," said JPMorgan.
"We hope Land Securities does not lower its stake below 50%, although everything has its price."

LaSalle Investment Management has released research today saying a recovery in the global economy is likely to be the key driver for property stocks in the next two years.

According to Global Insight, LaSalle's source for economic forecast data, global GDP is expected to rise 3.2% this year and 3.4% next year.

The US is expected to recover strongly, while in most European countries, recovery is likely to be more muted as the recession was more muted there.

LaSalle said it expects earnings of the global real estate companies in its investment universe to fall around 4% in 2010, with the weakest earnings from US REITs.

In 2011, the earnings of US companies should grow, which will increase earnings in LaSalle's universe to 4% in 2011, with stronger growth in 2012 and 2013.

Ernst Jan de Leeuw, head of European Securities at LaSalle Investment Management says the availability of capital will be another key driver for the property sector this year and next.

He said 2009 was a good year for capital raising with more than $50bn raised by public real estate companies in equity and rated debt.

"Capital markets continue to be receptive to the offerings of global real estate companies, particularly the US debt market, but with capital raises throughout the world," he said.

"More than $5bn in rated debt has been raised thus far in 2010, along with more than $1.5bn in equity raised by public real estate companies in the US , the UK , Switzerland , Austria , and Japan .

"LaSalle expects this trend will continue through 2011 and beyond, with variations among regions."

The sun is out now in Cannes, and all of a sudden everyone is more cheery. Among the people I'm meeting, the big topic of debate appears to be development - principally how you finance it. With the market coming out of the downturn, the kind of higher risk/higher reward opportunities being offered by development seem to be back on people's radars, but the trouble is, the numbers often still don't really add up unless you can bring in debt or outside finance of some sort.

With this in mind, it was heartening to see Savills pointing out that development finance is definitely back on the agenda for banks - and with some interesting names in the frame for development lending, including both Lloyds and RBS. The corporate financiers I've spoken to out here are also reporting that developers have tasked them with going out to institutions to try to find forward funding for new schemes - radical in the current market, but a return to the norm when looked at in the longer term.

£32bn of property debt to refinance in the UK in 2010? Pah, forget about it, small beer, there's an average of €155bn of debt to roll over per year for the next three years, according to CBRE's European Commercial Real Estate Debt ViewPoint. And with many banks having lent across borders during the boom years, the problem can't be viewed on a parochial basis. Loans needing to be refinanced in Poland have an effect on the UK market, if the capital needed to roll them is then unavailable for UK borrowers. Savills might have pointed to an increased number of lenders looking at the UK market, but general reduced levels of liquidity will persist across the Continent for several years yet.

Of the €970bn of debt secured against European real estate, €207bn is severely distressed according to CBRE. Secured against secondary property and at high levels of leverage, this debt is seriously underwater. Regulators last week warned that banks are likely to face continued stress due to losses on commercial property loans, and it is this €207bn slug that will cause the problems. CBRE said that banks are unlikely to instigate masses of forced sales, largely as a result of government intervention. Good news if you're a borrower trying to hang on to your assets. Bad news if you're one of the players outlined in another CBRE report, their investor survey, that thinks 2010 is the ideal time to buy.

The good news coming from the property funds sector has continued for another month with the Investment Management Association (IMA) today releasing net investment figures for November.

Property funds were the top selling fund sector for the second month in a row in November with £438m of net sales.

The result was significantly higher than the £377m of sales achieved in October.

Property's position at the top of the list in November is in stark contrast to January 2009, when the sector ranked 28th out of the 34 sectors covered by the IMA.

In November, property funds recorded £417m of net retail sales - the highest achieved since March 2007 when £467m of sales were made.

Last week, a further £441m was raised for corporate balance sheet repairs by two companies - Grainger and Quintain.
Grainger announced it would raise £250m by issuing up to 277.6m new shares through a two for one rights issue at 90p.
Quintain announced a three for one rights issue of 390.1m new shares, raising £191m.
In his weekly property sector note, Nomura Real Estate analyst Mike Prew said the two capital raisings take this year's total to £6.6bn, against a real estate sector capitalisation of £25bn.
"Derwent London is now the only FT-350 real estate company not to have resorted to dilutive equity financing," says Prew.
"We find it increasingly difficult to think of many other relevant real estate companies which need to, or can, tap the equity market for fresh capital with the possible exception of Minerva.
"Of the majors, Liberty International is the most likely we think to have a follow on placing, having raised £901m in two tranches in the year to date."

An interesting little point from last night's lecture on capital raising in the public and private markets, from KBC Peel Hunt's Alex Vaughan.

He says, if you've got an IPO planned, you'd better be underway by FRIDAY at the latest. Anyone not on the road speaking to potential investors by then would be better of waiting until next year.

In general his message was that the public market is willing to look at IPOs, but you need a fantastic track record, as investoprs would rather back a secondary offering from an already existing team - and this is where the most money has been raised from the stockmarket this year.