German housing firm raises €400m through bond issue

German housing provider LEG Immobilien has raised €400 million of fresh capital through a senior convertible bond issue.

The unsecured bonds will be convertible into around 3.4 million ordinary shares, representing 5.3 percent of the firm’s current outstanding share capital.

The eight-year bond carries a coupon of 0.875 percent per year and the initial conversion premium is 45 percent above the firm’s reference share price of €81.7029.

The fresh capital will provide long-term financing for LEG Immobilien’s recent portfolio acquisitions,  as well as for general corporate purposes, the housing provider said.

On 23 August, the company bought two residential portfolios for €98 million, which included 1,400 units across Germany, in “high-growth” markets such as Düsseldorf and “attractive” markets such as Dortmund, Essen and Wuppertal. The portfolios’ initial net rental yield is 5.8 percent.

LEG Immobilien will list the bonds on the Frankfurt Stock Exchange. Settlement date for the notes is expected to be 1 September.
Bank of America Merrill Lynch, BNP Paribas and Goldman Sachs acted as joint global co-ordinators and, together with Deutsche Bank, as joint bookrunners of the placement.

In January, LEG Immobilien issued its first corporate bond, through which it raised €500 million. The move allowed the company to diversify its funding sources, the firm’s CEO Eckhard Schultz, said at the time.

In 2016, the German property firm generated rental and lease income of around €763 million through its 130,000 rental properties.