Great Portland Estates has tapped up the bond market for a second time in as many years, raising $200m (£128m) through the US private placement market.
The London-focused REIT said the placement was originally launched at $75m and was more than five times oversubscribed, leading it to increase the issue to $200m.
The medium-term unsecured US dollar notes have been fully hedged into sterling, providing GPE with £128m of debt at a sterling weighted average fixed interest rate of 4.59%.
GPE said that more than half of the “select group of institutional investors” are new investors in the group.
Analysts welcomed the deal, claiming it “shows once again that the quality REITs are not ‘at the mercy’ of UK bank lending (or lack of it), and have diverse funding options available.”
It follows the REIT’s inaugural £160m private placement issue in May 2011, at a time when a number of private UK property companies including Grosvenor, Cadogan Estates and the Howard de Walden Estate, also added to their coffers through the bond market.
JP Morgan added that the implied spread over swap rates is 225bp, an increase of around 60bp from last year’s placement, reflecting the fact that borrowing margins have increased.
Despite this, because the underlying interest rates have fallen so much further, the resulting fixed rate at 4.59% is “significantly cheaper” than last year’s fixed interest rate of 5.32%, it said.
RBS and Lloyds Bank acted as joint agents.
