Hammerson has agreed what is understood to be the largest ever US private placement by a UK property company.
The agreement with eleven institutional investors from both the US and the UK is for the placement of £400m of private placement notes.
The fixed rate notes, with maturities at seven, nine, 11 and 14 years, are denominated in Euros (€177m), British Pound Sterling (£50m) and US Dollars ($232m) with the US Dollar portion being swapped to fixed Euro (€210). The notes were priced on 13 October 2016 with a weighted average coupon at a fixed rate of 1.70%, equivalent nominal value of $488m (£400m) 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. The USPP market was attractive in offering competitive pricing, deferred funding and a spread of maturities to assist with management of future refinancing risk.
The placement will extend the 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% (68% fixed as at 30 June 2016). The group’s hedge of euro-denominated assets will remain around 80%. Barclays, RBS and Santander acted as agents on this transaction.
Timon Drakesmith, chief financial officer of Hammerson, said: “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.”
Hammerson also revealed yesterday that the company and its joint venture partner Canada Pension Plan Investment Board have been given the clearance from the European Commission for the acquisition of Grand Central in Birmingham.
Having received clearance, the joint venture transaction and Hammerson’s disposal of 50% of Grand Central for £175m, as previously announced, is anticipated to close by mid-December.
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