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Capital bond issue a success

Posted On Thursday, 01 December 2011 02:00 Published by eProp Commercial Property News
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Despite volatile market investors still keen, oversubscribed issue shows the market has an appetite for credit where property assets are high quality

Barry StuhlerCapital Property Fund, SA’s fourth-largest, plans to use the R700m raised in the first bond issue under its R2bn domestic medium-term note programme to refinance maturing debt.

Standard Bank, which was the sole lead arranger and manager in the bond issuance said the issue was oversubscribed, receiving in excess of R1bn in bids.

Standard Bank corporate and investment banking head of debt capital markets, Andrew Costa, said yesterday the bond issue followed a growing trend by property companies to tap into capital markets as they sought to diversify their sources of funding that were attractively priced.

"Capital is an important client of Standard Bank and we are delighted to take them to capital markets. Our first issuance for Capital Property Fund signifies growth in a reasonably new emerging asset class that is coming to market," Mr Costa said.

He said it was a "resounding success" to raise a sum of this size in this volatile market.

"We believe that investors take comfort in the quality of the asset pool and low loan-to-value ratios, making this an attractive offering to participate in."

Capital’s strategy is to become a specialised A-grade industrial and commercial property fund, with a focus on the four major metropolitan areas.

The fund has previously argued that offshore-based specialist funds get better ratings because investors do not like muddled portfolios, as those that specialise do better over time.

Although the fund is struggling to buy A-grade properties, there are plans to develop A-grade properties from land held in the portfolio in the industrial and commercial space.

Capital Property Fund director Barry Stuhler said the successful issue demonstrated the depth and liquidity of the local market, and was an indication of strong demand among institutional investors interested in the debt capital markets as a source of assets. "This is still a challenging market but the fact that the issue was oversubscribed shows that the market continues to have appetite for credit where they see value, " he said.

Mr Stuhler said the breadth and spread of investors was a "good" vote of confidence in Capital Property Fund.

Capital’s portfolio includes R7,9bn of industrial properties, R5,4bn of commercial properties, R3,8bn of retail centres, and R300m of other properties.

Capital’s distribution per unit for the six months to June was 31,36c, representing an increase of 10,58% over the 28,36c for the interim period previously.

Last modified on Tuesday, 22 April 2014 10:04

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