* Shares offered at 53.1 percent discount
* Proceeds will be used to buy discounted property
* H1 adjusted diluted net asset value falls 18.5 percent
* Shares rise 4.5 percent to 390 pence by 0722 GMT (Adds more detail, shares)
By Sinead Cruise
LONDON, May 20 (Reuters) - Retail property specialist Shaftesbury is looking to raise 149.1 million pounds ($230.6 million) via a two-for-three rights issue to fund development of a new shopping and leisure hub in London's Soho.
The real estate investment trust, which owns large swathes of the capital's Chinatown and Covent Garden theatre district, is planning to transform a cluster of shabby properties in the popular West End neighbourhood into a tourist hotspot to rival its world-famous Carnaby Street near Piccadilly Circus.
It plans to sell around 90.3 million shares at 175 pence each, a discount of 53.1 percent to the closing price on May 19. The issue is fully underwritten by JP Morgan Securities on behalf of JP Morgan Cazenove, and Merrill Lynch.
"This rights issue will allow us to take advantage of excellent opportunities that are emerging to make strategic acquisitions in keeping with our long term investment strategy," Chief Executive Jonathan Lane said in a statement.
"We believe that the acquisitions funded by this rights issue will deliver good returns for our shareholders," he said.
The company said it would earmark the remaining funds to buy discounted properties in its core markets, where real estate is rarely offered for sale in buoyant economic conditions.
Shaftesbury shares rose 4.5 percent to 390 pence by 0722 GMT, outperforming a 0.6 percent rise in the FTSE 350 Real Estate Index.
News of Shaftesbury's fundraising plan comes a day after fellow London property landlord Great Portland Estates announced plans for a 175 million pound share sale to exploit investment opportunities carved out by one of the sharpest UK real estate corrections on record.
Average commercial property values have plummeted more than 40 percent since June 2007, when a vintage market boom was derailed by the global crisis in credit markets.
The correction has forced several firms, including Land Securities, British Land, Liberty International and Hammerson to seek cash from investors to avoid breach of loan-to-value covenants.
WEST END MAGNET
In a separate half-year results statement, Shaftesbury said the enduring appeal of London's West End to overseas visitors had mitigated some of the impact of the faltering UK economy on its 1.1 billion pound portfolio of shops, restaurants and bars.
The firm reported an 18.5 percent fall in adjusted diluted net asset value to 393 pence per share for the six months to end-March but it trumped the Investment Property Databank benchmarks for capital value returns over the period.
The value of its investment portfolio fell just 10 percent compared with the benchmark 22.6 percent fall.
Moreover, a valuation conducted last month in preparation for its rights issue showed the value of its portfolio actually rose by 175,000 pounds between end-March and April 15 on the back of steady rental income prospects, giving further fuel to calls that the two-year property slump was coming to an end.
Its group rental income rose to 30.5 million pounds, an increase of 1.6 million pounds versus the first half last year.
The board has recommended a 50 percent year-on-year increase in the interim dividend to 7.5 pence, reflecting stable income levels and strong tenant demand for its property. (Reporting by Sinead Cruise, editing by John Bowker and Rupert Winchester) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)