Extra MSA Group has issued a £220m bond secured against nine of its UK motorway service assets
The Abraham portfolio has a current total annual net rental income of in excess of £23m. The bond has a 10-year term with a fixed annual coupon of less than 3.7%. The proceeds have been used by Extra to refinance existing bank funding, return funds to its equity holders and support further growth of the business.
Large corporates are increasingly turning to the bond and capital markets to raise cheap debt to fuel their business plans rather than using only banks or traditional lenders.
Extra is majority-owned by Evergreen, an investment partnership managed by London-based M3 Capital Partners. It owns 18 MSAs in total with its Ulysses Portfolio also containing nine property assets.
Real estate investment manager, Aalto Invest placed the bonds with a consortium of long-term institutional investors comprising Rothesay Life, Dongbu Insurance and Dongbu Asset Management and an unnamed UK institution. Aalto Invest will also act as loan manager for the term of the bonds.
Aalto’s head of origination is Stephen Eighteen, the former head of non-core real estate and previously head of real estate finance for Europe at Royal Bank of Scotland.
Andrew Long, chief executive office for Extra MSA Group said: “We are pleased to have concluded this debt transaction at a low fixed rate for a full 10-year term. The calibre of the three global investors underlines both the quality of Extra’s property assets and its tenant-base, as well as Extra’s ability to proactively manage a secure income stream in this specialist sector, with further ongoing long-term income growth potential.”
Eighteen said: “This transaction provides Extra with long term institutional debt funding via the capital markets, allowing them to both diversify sources of debt funding and significantly extend the maturity of their overall debt profile.
“Extra holds a market-leading position in the MSA sector. The surplus income above the low fixed coupon on the bond locks in a healthy and growing dividend stream for the issuer, as well as providing the institutional investors with a fixed long term, secure income stream.”
RBS Private Placements acted on behalf of Extra. Aalto Invest acted on behalf of the three investors. Colliers International provided valuation advice to the investors.