British Land has confirmed that its £400m of new unsecured convertible bonds will pay interest of just 1.5%.
The UK’s second largest REIT said the five-year senior, unsecured convertible bonds will pay the coupon semi-annually in arrears.
It added that the initial conversion price into British Land ordinary shares had been set at 693.07p, a premium of 31.25% above the average price of the shares from launch – announced yesterday – to pricing.
In May last year, rival REIT Derwent London launched £175m of five-year convertible bonds paying interest of between 2.5% and 3% pa. It set the conversion price at a premium of between 25% and 30%.
Settlement of the BL bonds is expected to take place on or around 10 September 2012.
Finance director Lucinda Bell said: “We are delighted with the success of this transaction. Taking advantage of favourable market conditions, we have accessed a new source of finance to raise five-year term debt at a coupon of 1.5%, with flexible settlement options if converted.
“The issue size has been increased to take up some of the oversubscription from investors.”
bridget.o’connell@estatesgazette.com
