THABANG MOKOPANELE

Property Editor

SA’s biggest listed property group, Growthpoint Properties, said yesterday its R500m inaugural senior unsecured commercial paper issue listed on the JSE had been well oversubscribed, with R1,5bn of bids submitted.

CEO Norbert Sasse said yesterday the commercial paper market had provided Growthpoint with access to a more affordable source of funding and would contribute to continued distribution growth for the group’s investors.

Growthpoint had previously obtained funding from traditional sources, typically mortgage bonds from banks, as well as funding from the commercial mortgage backed securitisation market. Its investment-grade credit ratings had now allowed the group to diversify funding sources into new markets such as commercial paper and potential longer-term corporate bonds.

Growthpoint’s initial issue on the JSE, last Thursday, of R360m three-month fixed notes and R140m six-month floating notes linked to the three-month Jibar (Johannesburg inter-bank agreed rate) was a first for a South African listed property company.

“A total of 12 investors bid for the notes, resulting in significant demand and favourable pricing with a weighted average margin across the notes of 62 basis points,” Sasse said.

Growthpoint financial director Stuart Snowball said tapping into capital markets through commercial paper held further advantages for the group, including the lowered average cost of borrowings and diversification of borrowing sources.

Snowball said the group intended to continue, and possibly expand, its issues in the commercial paper market as long as the appetite remained favourable.

“In line with our conservative financial management, Growthpoint has adequate unutilised loan facilities in place,” he said.

“However, right now the cost of short-term funding is cheaper than long-term funding as a result of the greater availability of funds in the short-term space. It is our intention to prudently take advantage of this more affordable source of funding.”

Moody’s Investors Service recently assigned Growthpoint global scale long-term and short term issuer ratings of Baa2 and P2 respectively and South African national scale ratings of A1.za long term and P-1.za short term.

Growthpoint has local assets exceeding R29,2bn and a market capitalisation of more than R20bn. It has a portfolio of 438 retail, office and industrial properties producing gross revenue of more than R3,5bn.

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Source: Business Day