MGPA, the Australian fund backed by Macquarie Group, has emerged as one of the parties in early talks to buy Brixton, the struggling property company with £1.72bn of assets.
Brixton announced it had "entered into discussions with a small number of parties" on Friday. Rival Segro later told the stock exchange that it was one of those parties, and that it was considering an all-share offer for the listed company. City sources confirmed that MGPA was another that had contacted Brixton's board.
MGPA's move comes just weeks after it pulled out of a deal to buy 50 per cent of Broadgate, the £2.5bn valued City office scheme owned by the Ftse 100 company British Land.
Blackstone, the private equity giant, is also understood to be mulling a bid for Brixton, the country's biggest owner of industrial properties such as warehouses. Brixton has been trying to raise fresh capital to tackle its debt, which stood at £862.2m at the end of last year. Declining property values and tenants struggling to pay rents have put pressure on the company, which had a pre-tax loss of £770m in 2008. Two months ago, its chief executive, Tim Wheeler, was replaced by Peter Dawson, who has been at Brixton since 1997.
Brixton is understood to be trying to finding a large investor to provide funds, which could also interest Blackstone, should a suitable new owner not be found. The company had considered raising cash through a rights issue but there has been little market support for the move.
A leading figure in the sector said that potential bidders started "popping out of the woodwork" within hours of Friday's announcement. However, an industry adviser added that he had looked at the business on behalf of a private equity client, which decided to not make an approach due to the severity of the debt.
Brixton is being advised by Citi and Nomura, the investment banks. The company's share price closed at 61.75p on Friday, up 24 per cent on the start of trading.
This rise boosted the commercial property sector following a month when its biggest players had announced horrendous annual results. On Thursday, British Land announced a £3.9bn pre-tax loss in the 12 months to 31 March. On 13 May, Land Securities revealed a £4.8bn loss.Reuse content