Property on the scrounge

The property sector is going to be passing round the begging bowl over the coming months. There are likely to be a glut of rights issues from the big boys in the building and construction industry. It will help to bail them out but it will inevitably mean a dilution of stock which is bad news for existing shareholders.

It will be interesting to see if the sponsors of the rights issues have much success in launching their whip rounds. It??â??â??s happened in the past in the building sector but that was filling their coffers to take full advantage of a future boom.

But the market is very different now. The future is black not boom. It??â??â??s been estimated that ??Â?15 bn of new equity might have to be found to reduce the loan to values ratios to around 40 per cent.

Gloomy forecasts and recent mark downs in land values saw property companies take another mauling on the Stock Exchange yesterday. British Land fell 29 p to 537p and Hammerson shed 36p to 514p. Derwent Land dropped 21p to 778p. Big brokers such as Merrill Lynch will be looking cautiously at sponsoring rights issues.