Property firms ask investors for £1.2bn to mend balances

Liberty International, Barratt Development and Redrow all seek new funding

Liberty International completed its second shares placing of the year yesterday, as housebuilders Barratt Developments and Redrow also announced rights issues designed to repair their battered balance sheets.

David Fischel, the chief executive of the property group Liberty, said the 9.9 per cent placing was priced at 500p a share and raised £280m. He said the money would be used to invest in the company's existing estate, which includes much of Covent Garden in London. Last year, Liberty mothballed spending plans for its portfolio. It also raised £592m from investors in April to ease pressure on its banking covenants and to finance the group until December next year.

"This exercise is about investing in our existing estate and taking advantage of the positive momentum in the sector," Mr Fischel said. "We have made disposals, and that has now been completed. There are no plans for acquisitions or to fund major new projects".

Liberty's stance on acquisitions differs from that of its peers British Land and Land Securities, which have both recently raised money through disposals to fund new projects.

Separately, Barratt Developments raised £175m yesterday through a placing with institutional investors. The housebuilder is looking to raise £720.5m from its shareholders, with the remaining £545.5m financed by a 1.3-for-one rights issue at 100p a share. Its stock closed up 3 per cent at 275.7p.

Most of the money will be used to refinance the group's debt pile, although its chief executive Mark Clare pointed out that the cash call would also allow the group to invest £600m over the next three years, "something we would not have been able to do without raising the money".

Mr Clare added that Barratt had decided to act now, as a delay would have seen it lose out on deals it would like to do, therefore it needed the firepower. "Market sentiment has shifted dramatically and to leave it longer would have been a risk," he added.

Barratt's buyers have in recent months contracted to spend £100m on new land, while the company will also seek to improve up to 35 existing sites.

The cash call, which the company said had the support of investors, came as the group unveiled a full-year pre-tax loss of £679m, down from a profit of £137m this time last year.

Investors in the construction sector were also offered a smaller deal by Barratt's rival Redrow, which said yesterday it was looking to raise £156.1m through a rights issue. The money will largely be used to "strengthen the balance sheet and reduce net gearing", added the chairman Steve Morgan, who owns 29.9 per cent of the group.

Mr Morgan confirmed that he would support the call for equity in proportion to his holding in the company, and also that £15m of the proceeds would be used to fund the acquisition of Harrow Estates, a private company that he also owns.

Redrow's shares closed down 2.7 per cent at 227.1p as it announced the 13-for-14 rights issue at 105p a piece.