Unibail-Rodamco-Westfield has attracted over €6.5 bn of demand from investors for a €2 bn debt issue, ensuring a very competitive price for the capital.
The retail REIT has issued the new debt in two €1 bn tranches to fund a tender offer to buy back existing shorter-dated bonds and to refinance upcoming bond maturities.
URW’s current CEO, Christophe Cuvillier, is leaving the company to be replaced by Jean-Marie Tritant early next year, after the board’s ‘RESET’ plan which included a €3.5 bn equity raise, was voted down by shareholders on 10 November. They blasted the proposal as ‘value destructive.’
The rebels - co-led by Leon Bressler who was once Unibail's CEO - cited the company’s liquidity and relatively low cost of debt versus equity as reasons to reject the plan. Several have since joined the board.
Analyst Julian Livingston-Booth of RBC observed that the new issue has priced cheaper than bonds issued with comparable maturities back in April at the height of the Covid pandemic.
Yesterday’s issue achieved a 115 basis point spread over the swap for a 6-year, 5-month maturity with a 0.625% coupon for one €1 bn bond. And for the other £1 bn bond, with an 11-year maturity, the cost is 160 bps over the swap and a 1.375% coupon.
The average weighted cost of debt on the five existing bonds which are subject to the tender offer is 1.67%, according to Livingston-Booth.
He wrote: ‘Unibail reported an average in-place cost of debt of 1.8% with its 9M2020 results, representing a blend of 1.2% for € debt and 3.7% for $ and £ debt. We estimate that the immediate impact of Unibail’s bond issue is to reduce its average in-place cost of debt by c. 5bp. The 1.67% average coupon on the bonds included in Unibail’s tender offer is above the average of 1.0% on the bonds Unibail just issued.
RBC said that together with a €620 mln asset sale - the disposal of Nestle’s ‘SHiFT’ HQ in Issy-les-Moulineaux in SW Paris, to Primonial/La francais/EDF Invest - URW’s liquidity rises to circa €15bn.
