UK shopping centre investor and developer Hammerson has raised £400 million of debt through a US private placement, in what CFO Timon Drakesmith (pictured) said is likely to be the largest such deal by a UK property company.
The agreement was made with 11 institutional investors from the US and the UK for the placement of notes, which have maturities at seven, nine, 11 and 14 years. The transaction is Hammerson’s second US private placement. Five investors from the first deal, in 2013, have participated.
Hammerson said that the US private placement market was attractive in offering competitive pricing, deferred funding and a spread of maturities to assist with management of future refinancing risk.
The fixed-rate notes are denominated in euros, pound sterling and US dollars to the amounts of €177 million, £50 million and $232 million. The US dollar portfolio is swapped to fixed euro, equating to €210 million.
The notes were priced on 13 October 2016, with a weighted average coupon at a fixed rate of 1.7 percent, equivalent nominal value of $488 million (£400 million) and weighted average maturity of nine years.
The placement will fund in January 2017 and will repay short-term bank facilities used for recent acquisitions in Dublin and Birmingham.
In September 2015, Hammerson sourced a €1 billion revolving credit facility from five lenders to finance its share of the purchase of the €1.85 billion Project Jewel loan portfolio from Ireland’s National Asset Management Agency (NAMA), through which it eventually acquired Dublin’s Dundrum Town Centre shopping mall.
In January 2016, the firm financed its £350 million purchase of the Grand Central shopping scheme in Birmingham with a €500 million increase to the existing revolving credit facility.
In April this year, Hammerson agreed a new £420 million unsecured revolving credit facility with a syndicate of eight banks; Lloyds, HSBC, Bank of China, China Construction Bank, Mizuho Bank, Wells Fargo, Barclays and Crédit Industriel et Commercial. The five-year facility carried an initial margin of 90 basis points. The loan was used to partially refinance the €1.5 billion of debt which financed Project Jewel and Grand Central.
The latest US private placement will extend Hammerson’s weighted average debt maturity by approximately 0.8 years (six years at 30 June 2016) and will increase the proportion of the group’s fixed rate debt by approximately 10 percent, to 68 percent fixed as at 30 June 2016.
“This financing locks in long-dated funding at all-time low interest rates. Being Hammerson’s second issuance into this market, we are delighted to have built upon the relationships with debt investors from our first placement in 2013 as well as introducing six new investors. We believe this is the largest ever private placement for a UK property company,” said Drakesmith.