Brixton inspires market as takeover talks get under way

The firm, which owns warehouses around Heathrow and Park Royal, said it "has entered into discussions with a small number of parties" but warned that talks were "at a very early stage".

The Evening Standard understands that rival industrial landlord Segro - formerly Slough Estates - is among those interested in making an offer. It sent the shares up 6p to 55¾p valuing Brixton at £151.5 million. The stock peaked at 580p in early 2007 and was at 157p early this year before crashing as low as 14¼p in March.

Brixton, led by chief executive Peter Dawson, has felt the full force of the property market's meltdown and has desperately been trying to raise funds as it labours under £860million of debt.

Commercial property has lost more than 40% of its value since the peak in 2007 and rental income is under pressure as tenants go bust.

Rival property firms such as Segro, British Land, Hammerson and Land Securities have all secured funds through hefty rights issues but Brixton has struggled to find support in the City. Liberty International, which owns the Lakeside shopping centre in Thurrock, today said its £620 million rights issue was taken up by 77% of shareholders. Many of its South African investors were unable to take part and the fundraising was fully underwritten.

Brixton has turned to property disposals to raise cash and last week offloaded four warehouses for £70million.

The firm said it was still looking to increase its "financial flexibility" through restructuring its debt, selling further assets, or by selling shares.

Long-serving chief executive Tim Wheeler was axed in March and replaced by 37-year-old Dawson.

Although Dawson was long seen as a successor to Wheeler, the change came far earlier than many expected. Famously last summer, Wheeler used Bob Dylan's "apocalyptic opening lines ['There must be some way out of here,' said the joker to the thief/ 'There's too much confusion, I can't get no relief']" of All Along The Watchtower to tell the story of the collapsing property market.

Brixton racked up losses of £768.8 million last year against a profit of £58.2 million a year earlier. Portfolio value fell 27.2% to £1.8billion and it axed its final dividend.