UK property heavyweight British Land is looking to raise £740 million of equity 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 today to sell 341 million new shares at 225 pence each in the latest phase of a multi-billion pound deleveraging plan that has already triggered the sale of several landmark assets.

It becomes the second major UK real estate company to ask for more cash from shareholders this week, after rival FTSE-100 constituent Hammerson conceded on Monday it needs to issue new shares to shore up its finances.

However, British Land's newly appointed chief executive, Chris Grigg -- who intends to purchase £800,000 worth of new shares personally -- said his company's balance sheet was not in need of "radical surgery".

"We're doing this transaction from a position of strength," Grigg told a conference call. "I would describe any changes we are about to make as evolution rather than revolution ... what this deal has done is put us in a very strong position with respect to covenants," he said.

However, some analysts disagreed. "If a huge £740 million rights issue on the back of a massive portfolio write-down and selling down interests in serially underperforming 'trophy' assets is not radical, what is?," Nomura property analyst Mike Prew told Reuters, adding that the issue was larger than the broader market anticipated.

The price of the new shares represents a 53 percent discount to the middle-market closing price on 11 February. The issue is fully underwritten by Morgan Stanley Securities, UBS and Euro Lights Limited, an affiliate of GIC Real Estate - the property unit of the Government of Singapore.

Finance Director Graham Roberts said the issue, combined with the £590 million sale of a stake in its Meadowhall shopping mall, would enable the company to tap up to £3 billion of undrawn debt facilities, giving it substantial firepower for new asset buys.

British Land shares, which have almost halved in value in the past 12 months, were trading 3.4 percent lower at 467 pence by 0937 GMT.

In its fiscal third-quarter report, tracking performance to 31 December, British Land showed it continued to suffer from the same freefalling UK real estate prices it hoped to exploit.

Its net asset value per share tumbled 31 percent to 718 pence and the total value of its portfolio sank 13.3 percent over the quarter to 10.2 billion pounds.

"This third-quarter report comes at a time of unprecedented dislocation in financial markets, the challenging conditions will continue to affect the property market but British Land is now very well placed to weather to the storm," Grigg said.

Average commercial property prices have dived by more than a third since mid-2007, forcing some companies to seek new equity to placate lenders and curb soaring loan-to-value ratios.

Grigg said the company had already sold more than £5.7 billion of assets in the last three years, but he quashed rumours the company was in negotiations to sell its Broadgate office complex in London's City financial district.

Despite sharp markdowns, British Land said its operational business remained sound. The portfolio is 96 percent let with only 4 percent of leases up for renewal before March 2011.

It posted like-for-like rental growth of 3.8 percent year-on-year in the nine months to December 2008, ahead of industry benchmarks.

The dividend rose 7 percent to 9.375 pence for the quarter, in addition to 18.75 pence for the first half year.