Sell-off lands £575m for BAA

AIRPORTS group BAA has raised £575m in cash by selling off its property portfolio of cargo warehouses and offices into a joint venture with the insurance giant Aviva.

BAA, whose debt mountain is spiralling up to £6bn as a result of its £4.2bn construction of a fifth terminal at Heathrow plus upgrades at its other six UK airports, is pumping the assets of its BAA Lynton property arm and other airport real estate into Airport Property Partnership, a 50:50 joint venture with Aviva's Morley Fund Management.

Under the deal, Morley will pay BAA £225.5m in cash for a 50% share of the property portfolio, with the joint venture raising £350m in debt and paying BAA that figure in cash.

With BAA retaining a £225.5m equity position in the joint venture, that values the transaction at £801m on a property portfolio which has a book value of £628m.

'We are crystalling value for our shareholders when the commercial property market is buoyant,' said BAA chief executive Mike Clasper.

Shares in BAA, which has previously formed joint ventures of its hotels and other industrial property assets, rose by 6½p to a three-year high of 639p.