The rush to raise cash in the capital markets by the property sector is gathering pace. In the past week, the property sector has taken £160m out of the market, and the indications are that the spate of capital raising is set to continue.
The latest fund-raisings come in three shapes — a simple debenture stock, a syndicated loan against a specific property and a sterling Eurobond.
MEPC is raising the sterling Eurobond, and it is a reasonable assumption that, had the Budget not imposed a stamp duty on some domestic issues, the company might have raised a domestic debenture issue.
MEPC is issuing £75m of 10 1/4% bonds due 2003, its largest issue to date in the international markets. The bonds are issued at par in bearer form in denominations of £10,000 and £1,000. The bonds are unsecured, but there is a covenant that MEPC will not at any time permit the aggregate of all secured and unsecured borrowings to exceed 175% of consolidated net tangible assets.
The syndicated property loan is being raised by Greycoat Group, which announced its intention on the eve of the Budget and which we reported in this column last week. The move follows a £37m rights issue by Greycoat earlier this month, and the proceeds will fund the purchase and reconstruction of Lutyens House in the City. The loan is a limited recourse facility: the ability of the lenders to look for repayment from Greycoat itself is limited.
The debenture placing is by Asda Property, and consists of £9m of first mortgage stock dated 2011. The stock is being issued to reduce variable rate borrowings and to provide a stable borrowing base for future expansion.
