Jones Lang LaSalle is to issue a €165m corporate bond to refinance existing bank debt.
Finalised details have not yet been released giving terms for the issue of senior unsecured notes due 2007 but they will be offered through a wholly-owned subsidiary, Jones Lang LaSalle BV.
This is the first property services company to issue such a bond. CB Richard Ellis had a subordinated debt offering in the US two years ago but JLL’s issue is senior debt.
Bill Sullivan, JLL’s chief financial officer, said: “We have some debt on our books which is due 15 October and we had always anticipated refinancing that debt before the end of August.”
Sullivan said a bond was chosen as the market had improved substantially and the company was able to get a good rating. A bond in euro also allows the company to hedge some of its currency exposure by allowing it to have some of its costs in euro. “As we are a property company that reports in dollars, managing our exposure is important and this bond is a natural hedge.”
Ratings agency Standard & Poors has given the company a corporate credit rating of triple B minus. This rating is an “investment grade” standard which companies need to issue high-profile corporate bonds but is the lowest grade in a range from triple B minus to triple A plus.
S&P said it has based its rating on JLL’s “moderate financial profile and strong market position in real estate services, particularly in the growing areas of property and facilities management and real estate fund management, which are characterised by revenues of a more stable and recurring nature than traditional real estate brokerage commission.”
