Spain's largest listed property firm Colonial has reduced its finance costs by 50% after successfully placing a €1.25 bn Eurobond with an average coupon of 2.2%.
Spain's largest listed property firm Colonial has reduced its finance costs by 50% after successfully placing a €1.25 bn Eurobond with an average coupon of 2.2%.
The issue - a milestone in the Spanish company's history - is split into two series of four and eight years of €750 mln and €500 mln with interest of 1.86% and 2.72% respectively.
Colonial said it will use the net proceeds to repay all amounts outstanding on an existing syndicated loan of €1 bn provided by lenders including Crédit Agricole Corporate and Investment Bank, GIC, AXA, Generali, ING and Banco Sabadell.
'Colonial’s issue was well received by the investment market, demonstrated by the fact that the offering has been substantially oversubscribed,' the company said in a statement. A company spokesperson indicated that demand for the bond exceeded €2.7 bn.
The operation will result in financial savings of €20 mln a year.
'The success of this issue, which is the first of its kind in terms of volume, terms and conditions, is a major milestone for Colonial, demonstrating how the markets are endorsing our successful strategy focused on a high quality prime office portfolio diversified in three markets,' commented Colonial’s chairman Juan José Brugera.
Colonial plans to ride the recovery wave in southern Europe after unveiling almost half a billion in profits in 2014, CEO Pere Vinolas recently told PropertyEU.
The company, which reported writedowns of over €5 bn in the years following the collapse of the local property market, is back on the investment trail with plans to invest between €300 mln and €500 mln in acquisitions as well as development opportunities. 'We will not invest passively in stock,' Vinolas said. 'There is a lack of investment product in Spain and the market is undergoing yield compression so we prefer to focus on the value-add segment and on the creation of value through redevelopments and repositionings.’
Colonial owns about €5.7 bn of prime office buildings in Spain and France.
