Hammerson is raising £584.2m of new equity from its shareholders to reduce its debt and avoid breaching its covenants.

The REIT this morning launched a rights issue of 404.7m new shares based at a price of £1.50 a share, which is a 62% discount to the pre-announcement price on Friday of £3.97p a share.

Hammerson chairman John Nelson said the new equity would be used to pay down debt, with renegotiation of bank facilities difficult to achieve in the light of current market conditions.

The new equity should see gearing reduced to 81%.

The news of the rights issue coincided with the end of year results which showed a 33% fall in NAV in 2008 to £10.36 a share.

This translated to a loss of £1.6bn for the calendar year 2008. The rights issue is underwritten by Citi and Deutsche Bank.