German real estate group ADO Properties has issued its inaugural bond, raising €400 million.
The bond has a maturity of seven years and carries an annual fixed coupon of 1.5 percent.
The firm, focused on the rental housing market in Germany, said the bond was offered to pan-European institutional investors and met with “significant” demand, resulting in a 2.25 times oversubscribed order book.
More than €300 million of fresh capital will fund “a strong acquisition pipeline”, ADO Properties said.
“We see a continuous deal flow of new opportunities in line with our past experience and are confident to deploy this additional capital over the next six to 12 months into new accretive acquisitions,” said Rabin Savion, chief executive officer of ADO Properties.
The firm said approximately €80 million from the net proceeds are planned to be used to repay existing debt with maturities up to 2019. It added that the average interest rate of the debt expected to be repaid is 2.7 percent and the fair market value of the assets underlying it is around €260 million.
With this transaction, the average maturity of ADO Properties’ total debt has increased from around five to more than five-and-a-half years and the average interest rate decreased by around 10 basis points, the firm noted.
The bond has an investment-grade rating from Moody’s of Baa2, with stable outlook.
“The successful bond placement, together with our solid investment grade rating by Moody’s, is further expanding our access to capital to support our future growth strategy,” said Florian Goldgruber, chief financial officer of ADO Properties.
Barclays, Morgan Stanley and Societe Generale Corporate & Investment Banking acted as joint bookrunners on the bond placement.