Asda Property seeks pounds 16m to expand its portfolio

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The Independent Online
LONDON-BASED Asda Property Holdings is raising pounds 16m from shareholders to build up its property portfolio, writes Neil Thapar.

The company said that commercial property prices were rising and there were attractive opportunities to make selective acquisitions.

In the past two years the group has invested about pounds 42m in acquisitions of which pounds 15m was spent this year. It plans to build its portfolio further, largely in the retail and industrial sectors.

The two-for-five cash call at 75p a share will initially reduce the group's net borrowings from pounds 70m to about pounds 55m, but borrowings are expected to rise again as more properties are bought. The group estimated that borrowings would broadly match shareholders' funds by the end of this year.

'Although the company has existing cash balances and unused bank facilities available, if future acquisitions were to be funded solely by borrowings, gearing would rise to an unacceptable level,' Tony Roscoe, managing director, said.

The rights issue was accompanied by a pledge from the company that it would at least maintain a 2.1p dividend this year.

However, the Davidson family, which owns 56.5 per cent of Asda equity, is not taking up its rights.

The shares dipped 3p to 86p yesterday. They have soared by almost two- thirds since the beginning of the year.