UK retail REIT Hammerson has raised €500 million through a bond issue in order to partially refinance the revolving credit facility (RCF) which funded its purchases of an Irish loan portfolio and a shopping centre in Birmingham.
The seven-year bond was priced at 157 basis points over the euro mid-swap rate and carries an annual coupon of 1.75 percent. Indicative pricing had been set at around 165 bps over mid-swaps. Hammerson’s senior unsecured debt is rated Baa1 (stable) by Moody’s and A- (stable) by Fitch.
The firm said that the issue was “significantly oversubscribed” and was placed with investors from the UK, France, Germany, Belgium and 15 other European countries.
Barclays, Deutsche Bank, JP Morgan and MUFG have been mandated as book-runners. Lloyds Bank, BNP Paribas, HSBC, Royal Bank of Scotland and Santander acted as passive book-runners.
“We were encouraged with the participation of our euro fixed income investor base and having issued a £350 million sterling bond last year it was pleasing to accommodate demand for a euro issue,” said Timon Drakesmith, Hammerson’s CFO. “This long term finance fixes low rates of interest and supports the investment returns from our recent acquisitions.”
Hammerson’s latest bond issue follows its launch of £350 million of notes last October. The sterling bond in part refinanced the €1 billion RCF which supported the joint purchase with Allianz Real Estate of the Project Jewel loan book from Ireland’s National Asset Management Agency (NAMA).
The Project Jewel portfolio comprised the loan backing the Dundrum Town Centre shopping mall located near Dublin as well as stakes in two additional Dublin shopping centres. Hammerson’s share of the €1.85 billion purchase price was €1.23 billion.
The RCF was extended by €500 million in January to cover the firm’s purchase of the Grand Central shopping centre in Birmingham. The 430,000 square foot Grand Central was bought for £350 million from Birmingham City Council.
The revolving credit facility was provided by BNP Paribas, Lloyds, JP Morgan, HSBC and Deutsche Bank. After the Grand Central purchase, Hammerson said that the expanded facility totalled £1.1 billion, of which £734 million matures in March 2017 and £367 million matures in September 2017.
Hammerson plans to refinance the bridging facility through a combination of asset disposals and capital markets issuance.
In late October, the REIT successfully issued the £350 million sterling bonds due 2025. The bond was priced at 173 basis points over the reference gilt and carried an annual coupon of 3.5 percent. Hammerson said that the issue was more than two times oversubscribed. The firm subsequently swapped the sterling bond nominal amount into euros.