The 167m shares being placed with investors were priced at 330p yesterday and went to a premium of 6p on the "grey" market which will continue until the shares are officially available for new investors on 6 April.
The original developers duly went into administration in May 1992, during the last downturn in the property market. Seven years later the future of the development is much more assured.
Thirty-five per cent of the 13.5m sq ft of potential office and retail space on the 81 acre site has already been built and let, and another 25 per cent is under construction.
Virtually all of that has been leased or sold and construction of the remaining 5.2m sq ft of office and retail space will not begin until at least half the space to be created is pre-let.
The flotation price values the entire capital at pounds 2.2bn, compared with the valuation of pounds 2.6bn put on the assets (see graphic). The pounds 551m raised will be used to pre-pay pounds 338m worth of debt and to honour the commitment to help fund the much delayed Jubilee Line extension.
But operating profits in the year to 30 June were just pounds 8.5m and after an interest charge of pounds 105m the company posted a loss of pounds 96.3m, with a further loss of pounds 17m in the first quarter of the current year. It could be 2003 before rental income exceeds interest charges and no dividends are likely until then.
Crucial information on individual leases, rentals and rent review terms, and the management's future strategy is still hard to come by.
Once the market in the shares has been established the company could set out on an acquisition trail, but the existing shareholders will also be free to reduce their holdings in six months time.
Prospects for the property sector have rallied slightly but opinions on the fair price for the shares vary quite widely between members of the consortium who are promoting the float and those who were excluded.
Nan Rogers at Charterhouse Securities sticks to her view that on the basis of current asset values a fair price is around 320p a share.Reuse content