Bond offering set to fund £85m Merry Hill investment
THE property company which owns the Merry Hill Centre is set to announce an £85m investment into the venue part-funded by a £350m bond offering.
In an announcement to the London Stock Exchange, intu properties said it was taking out an option to increase the bond offering by a further £50m.
The company completed the acquisition in the summer of the outstanding 50% of the shopping centre it did not already own after agreeing a £410m deal with the Queensland Investment pension fund in Australia.
The Guaranteed Convertible Bonds will have a maturity date in 2022.
The property outlined its intentions in the bond announcement.
It said: “The company intends to use the net proceeds of the offering to refinance the £101m drawn on the revolving credit facility for the £410m acquisition of the remaining 50% of intu Merry Hill in June 2016 and finance the identified asset management initiatives of £85m over the next two years to reposition the asset.”
The offering will also be used to fund the expansion of the company’s centre in Watford, as well as provide financial resources to enable the company to pursue further projects such as the leisure extension at intu Lakeside, the redevelopments of intu Broadmarsh in Nottingham and Barton Square at intu Trafford Centre and the development of the intu Costa del Sol shopping resort.
“These are expected to be accretive to both earnings and net asset value per share after taking account of the offering. The expected stabilised initial yield on these projects will be in the range of 6 to 10%,” it added.
“More generally, the company believes that the offering diversifies its medium-term sources of finance and improves its existing financial position.”
In a separate third quarter trading update, the company said it remained on target to deliver growth in like-for-like net rental income for 2016 in the range of 3 to 4%.
“We expect this momentum to continue in 2017 with good progress on lettings and rent reviews,” it added.
