Housebuilder to spend 拢300m on land purchases, partly funded by its recently doubled cash reserves
Housebuilder Berkeley Group is to raise 拢50m from its shareholders to help build a 拢300m war chest for land acquisitions.
In an interim management statement today, the housebuilder said it was issuing 6 million shares to existing shareholders in order to reinforce Berkeley's balance sheet 鈥渟o that it can take advantage of more opportunities to invest in new land鈥�.
The builder said that the continuing downturn was hitting sales, with reservations down 55% on the 鈥渉istoric average鈥� for the group.
Despite this, it managed to increase its cash reserves over the three months from November to January by almost 拢100m to 拢236m. This was in part because it had spent just 拢20.9m on land since May last year.
With the share placement, Berkeley says it will have 鈥渋n excess鈥� of 拢300m to spend on land purchases. It also said it was not expecting to write down the value of existing sites.
However, shareholders will have to forgo the expected 拢3 dividend Berkeley had previously committed to returning to them by 2014, as well as suffering a 5% dilution in price due to the share placement.
The company said it was in a 鈥渦niquely strong position鈥�, reporting more than 30,000 plots in its land bank at 31 October 2008, with a strategy that recognised the cyclical nature of property development.
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