German property investor Demire (Deutsche Mittelstand Real Estate) has raised a further €130 million of its unsecured corporate bond, which was originally issued in July this year.
The tapped bond was placed at an issue price of 101.25 percent above par value, on the back of “strong demand” from institutional investors, the firm said. The €270 million bond issue in July had an interest rate of 2.875 per year and a term until 2022.
Proceeds of the tapped bond will be used to refinance liabilities of the firm’s subsidiary Germavest, which total €94 million and have a current average interest rate of around 4.4 percent per year. Fresh capital will also be used for general corporate purposes, including future acquisitions.
With the completion of the planned refinancing of existing liabilities by year end, the average annual financing costs will decrease from 4.1 percent annually as of 30 June to 3 percent annually on a pro-forma basis, the firm said.
The firm expects an annual cashflow increase of circa €18 million per year due to ongoing lower interest expenses and a significant drop in redemption payments starting in the year 2018.
The tapped bond issue was admitted for trade on the Luxembourg Stock Exchange (Euro MTF Market). Deutsche Bank and Morgan Stanley acted as joint global co-ordinators in the transaction.
Standard & Poor’s and Moody’s rated the corporate bond at BB+ and Ba2, respectively.