Land buys remaining 50% of Broadgate

JOHN SHEPHERD

British Land has exchanged contracts to buy the outstanding 50 per cent stake in Broadgate Properties, the prestigious 1.5 million sq ft office development in the heart of the City of London, for pounds 121.5m.

Final completion of the deal, which is conditional on approval from British Land shareholders, is expected by the middle of next month.

The Broadgate development is almost fully let. The property assets of Broadgate Properties were valued at pounds 1.04bn on an open-market value on 15 December.

The company said: "The acquisition will allow us to consolidate the interests in the Broadgate and Ludgate estates, and to extract significant value from these outstanding office developments, where there are good prospects for long-term rental and capital growth."

It added that it also planned to refinance the existing pounds 800m of bank borrowings of Broadgate Properties on "significantly improved terms". British Land shares rose 1p to 370p after the announcement.

In the year to 30 June 1995, Broadgate Properties reported a pre-tax loss of pounds 14.4m after charging exceptional items of pounds 10.6m.

The loss compared with a profit in 1994 of pounds 28.8m, after including an exceptional gain of pounds 29.9m.

John Weston Smith, finance director of British Land, said the company was in "advanced negotiations" over refinancing Broadgate's debts. He hoped that the 60 banks originally involved in the multi-million- pound project would agree to a "straight debt replacement".

He added: "We're obviously looking to renegotiate fresh terms on a reduced margin rate over Libor. The fact that interest rates have also fallen also gives us a negotiating advantage, while the full acquisition of Broadgate has come at a good stage in the property cycle."