Bruntwood looks to raise £70m with first retail bond
PROPERTY group Bruntwood, which has a number of assets in Yorkshire, is close to completing a £570m refinancing after launching a retail bond.
Chief executive Chris Oglesby told TheBusinessDesk.com that he hopes to raise between £50m-£70m depending on demand.
The bond is offering a fixed rate of 6% until 2020 on minimum investments of £2,000.
The group, which owns 110 properties valued at £891m, will secure the bonds against seven properties: West Gate, Leeds; Alberton House, Manchester; Exchange Court, Liverpool; Lancastrian Office Centre, Old Trafford; South Central, Manchester; Wilderspool Business Park, Warrington; and Landmark House, Cheadle Hulme.
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 ongoing.
Mr 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.”
