Chelsfield raises pounds 63m to fund Westbury buy

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The Independent Online
Chelsfield raised pounds 63m yesterday to fund its recent acquisition of Granada's Westbury hotels, placing 20 million shares at 317p, a narrow discount of only 3 per cent to the property company's closing share price last night of 327.5p.

Elliott Bernerd, chairman, said the cash-raising, which had been oversubscribed by investors, would keep gearing at a comfortable level ahead of a raft of new developments, including big projects at White City in West London and the nearby Paddington Basin.

The ease with which the new funds were raised from the City is the latest indication of the esteem in which Mr Bernerd is held by investors following a string of innovative deals since he brought Chelsfield to the market three years ago. As well as the big London development sites, Chelsfield is the owner of the giant Merry Hill shopping centre in the West Midlands, the Wentworth golf course and only recently sold out of the Babelsberg film studios near Berlin.

The announcement of the placing coincided with full-year figures for 1996 showing a 22 per cent rise in net assets per share to 225.6p. Analysts said that figure understated Chelsfield's true value by a sizeable margin because of the company's policy of booking its developments at cost. The 37-acre White City retail and leisure scheme, in the books at pounds 50m, is estimated by analysts to be worth as much as pounds 150m.

Mr Bernerd described Chelsfield's performance last year as "the strongest recorded by the group to date". He said it had continued its focus on core central London developments and large retail-based schemes and had a number of separate components capable of showing good returns. After a rise in profit before tax from pounds 10.6m to pounds 14.4m, a dividend of 3p was recommended, up from 2.75p.

Mr Bernerd denied that Chelsfield had missed an opportunity to buy property developer Imry from Barclays, saying the subsequent decision by Dutch property investor Rodamco to buy only part of the company vindicated its unwillingness to overpay.

Merry Hill, the Midlands shopping centre owned by Chelsfield, continued to thrive, Mr Bernerd said. Rents of pounds 105 per square foot only two years ago had risen to pounds 145.