Confident Greycoat buys big at Victoria

GREYCOAT, developer of some of London's most high-profile office buildings, confirmed its confidence in the capital's property market yesterday by buying the 50 per cent it did not already own of a 400,000 sq ft office and retail scheme in Victoria.

The purchase of the property on Buckingham Palace Road was forced on Greycoat by the imminent repayment of a pounds 125m bond secured on the building. The company's partner, Sir Robert McAlpine, is understood to have wanted to repay the loan by selling the building. Greycoat wanted to keep it.

Richard Guignard, managing director, said the building, let to the Department of the Environment, PA Consulting and Elf, saw its value grow faster than any other property in Greycoat's portfolio last year and provided useful cash flow.

Greycoat is funding the purchase by raising pounds 45.1m through a three-for-eight rights issue at 13p a share. The shares closed 1.5p lower yesterday at 15.5p.

Greycoat also announced a loss for the year to March of pounds 40m, compared with a loss of pounds 167m in 1993. The full-year figure included a pounds 3.5m profit for the second half in the period following a complex refinancing agreed last November.

The restructuring, which included an pounds 86m capital injection by investors led by the UK Active Value Fund, would lead to a profit this year, Mr Guignard said.

Net assets rose during the year by 16 per cent to pounds 163.4m, equal to 17.4p per share, reflecting the restructuring. The appreciation in the value of the underlying portfolio was 10 per cent.

Back from the brink of collapse, Greycoat is embarking on a development programme that will include 750,000 sq ft of offices at Paternoster Square next to St Paul's Cathedral.