Bruntwood aims to raise £70m via retail bond
BRUNTWOOD, the family-owned property group, is looking to raise up to £70m with the launch of a first retail bond, which will pay investors a 6% return.
The firm, which owns office schemes in Birmingham city centre – Cornwall Buildings in Newhall Street, the Mclaren building on Priory Queensway and Centre City in Hill Street – says the bond issue is part of an on-going plan to refinance its borrowings.
The bond is secured against parts of the company’s portfolio and guarantees 6% until 2020 on minimum investments of £2,000.
Chris Oglesby, chief executive of Bruntwood, said: “We are very pleased to announce the launch of our first retail bond. This will enable us to diversify our funding base without increasing our leverage.
“Bruntwood has operated in the regional property sector for 37 years and looks forward to joining the growing number of companies in the retail bond market trading on the LSE ORB platform.”
The offer, which ends on July 17, concludes a year in which Bruntwood has sought to refinance against a gloomy economic backdrop and negative sentiment towards the property sector.
In January it secured a £120m loan with Legal & General to refinance part of the £432.5m of Commercial Mortgage Backed Securities (CMBS) which were initially arranged through RBS in 2007. In February it secured an extension on £229m of the CMBS. The remaining £75m will be refinanced by the bond issue and an extension to a £225m loan facility with RBS, HSBC and Barclays, which is on-going.
Oglesby said: “Twelve months ago we found ourselves in a situation where we had £590m of debt to refinance in 15 months. The two sources of our debt at that time were both in seriously contracted markets, securitisation and banking. So we went out to the markets to see what other sources were available.
“We’re only the second private company to go to the bond market. Quite a few property companies have gone before but there’s a limit to how many can access this debt because it’s primarily corporate debt and most are set up as special purpose vehicles or don’t have a trading history.
“Our advantage is we have 37 years’ of trading history and have never broken a banking covenant. Because we’re private we’re also providing additional security.”
Bruntwood has a portfolio of 110 properties worth £891m (as of June 2013). The group’s portfolio is home to more than 2,100 customers.
