British Land unveils £740m deeply discounted cash call

British Land became the latest real estate developer to announce a heavily discounted rights issue yesterday in an attempt to shore up its finances.

The property heavyweight is looking to raise £740m through a two-for-three rights issue it hopes will quell the risk of a financial covenant breach and bankroll an opportunistic acquisition spree. Britain's second-largest property company announced plans to sell 341 million new shares at 225p each in the latest phase of a multibillion-pound deleveraging plan that has already triggered the sale of several landmark assets.

With the cash call widely expected, beleaguered hedge funds, which have been starved of easy money recently but which made a killing around rival Hammerson's rights issue earlier in the week, are likely to have taken up short positions in British Land. These are set to be revealed today. Rights issues tend to make shares fall, providing a natural shorting opportunity.

The price of the new shares represents a 53 per cent discount to the closing price on 11 February. The issue is being underwritten by Morgan Stanley, UBS and Singapore's GIC.