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Investore seeks up to $100M in six-year bond offer

Investore seeks up to $100M in six-year bond offer to repay bank debt

By Paul McBeth

March 5 (BusinessDesk) - Investore Property is seeking up to $100 million through a six-year bond issue, which it will use to repay bank debt, diversifying the property investor's funding sources and extending the length of maturities.

The Auckland-based company is offering up to $75 million of senior, secured, fixed-rate six-year bonds, and will accept oversubscriptions of up to $25 million, it said in a statement. No indicative margin has been set, although fellow listed real estate investor Goodman Property Trust sold 5 1/2 year bonds last month at a 1.2 percent margin. The six-year swap rate was recently at 2.82 percent.

Since Sept. 30, Investore has bought three Bunnings retail stores and a development site in Timaru, and sold two properties, drawing down $307.4 million of its $370 million banking facility. Including revaluation gains of $25.5 million, that gives it a loan-to-value ratio of 41.6 percent.

The real estate investor has to keep its loan-to-value ratio at or below 65 percent, an interest coverage ratio of at least 1.75 times earnings before interest and tax, and maintain a minimum weighted average lease term of six years. Its interest cover ratio is at 3.4 times and its WALT is 13.8 years.

"The net proceeds of the offer will be used to repay a portion of Investore’s existing bank debt," chair Mike Allen said in the product disclosure statement. "The board believes this will strengthen Investore’s capital structure, provide diversification of funding sources and extend the tenor of its debt."

The bonds will mature on April 18, 2024, extending the average tenor of Investore's debt profile to 3.5 years from 2.1 years.

Investore bought the three Bunnings stores from its manager, Stride Property Group, to broaden its customer base with Woolworths Group-owned Countdown supermarkets accounting for almost three-quarters of its portfolio.

The indicative margin will be announced next Monday with a bookbuild scheduled on March 20, with the offer opening on March 21 and closing on April 12. There's no public pool with all bonds and oversubscriptions reserved for customers of joint lead managers ANZ Bank New Zealand, Deutsche Craigs, Forsyth Barr and Westpac Banking Corp.

Investore shares fell 0.7 percent to $1.37 and have declined 7.4 percent so far this year.

(BusinessDesk)

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