Growthpoint Properties announced on Thursday that it had rolled over R350 million of 3-month senior unsecured commercial paper (CP), which expired on 12 May 2010.

The successful issue received bids from 10 potential investors totalling a massive R1.6 billion for the R350 million that was on offer.

The strong appetite for Growthpoint paper saw the interest margin decrease to 45 basis points from previous levels of 52 bps in February 2010 and 56 bps in November 2009. The notes carry a Moody's national short-term P1.za rating, the company said.

The demand for this issue continues to reinforce the success of Growthpoint's CP programme with its R500 million inaugural CP issue which was also significantly oversubscribed, with R1.5 billion submitted. This issue was the first for a South African listed property company.

Growthpoint is the largest South African listed property company with a market capitalisation of over R23 billion.

Growthpoint has a quality portfolio of 435 properties in South Africa valued at R29.7 billion and a further 24 properties in Australia through its investment in Growthpoint Properties Australia, valued at R4.9 billion.

Growthpoint Financial Director Stuart Snowball explained that the company's continued access to capital markets through CP holds advantages, including the lower average cost of borrowings and diversification of borrowing sources.

"Growthpoint has adequate unused financial facilities in place, in line with our conservative financial management," said Snowball.

"Currently, with the greater availability of funds in the short-terms space, the cost of short-term funding is cheaper than long-term funding. We believe it is prudent to continue to take advantage of this more affordable source of funding".

Snowball noted that Growthpoint intends to maintain, and possibly expand, its issues on the CP market as long as the appetite for the uptake remains favourable.

Source: I-Net Bridge

Publisher: I-Net Bridge
Source: I-Net Bridge