JSE-listed Growthpoint Properties has floated its inaugural US dollar Eurobond. The Eurobond proceeds will be used by Growthpoint to refinance certain of its existing investments in Central and Eastern Europe and to fund its investment into Warsaw-listed Polish property investor Griffin Premium RE N.V. (GPRE).

“With its first ever Eurobond, Growthpoint has taken advantage of a low interest-rate environment in the Eurozone to raise long-term debt, which also diversifies our sources of funding and extends our debt maturity profile,” explains Dirkje Bouma, Growthpoint’s Group Treasurer.

Growthpoint lists first dollar based EurobondNorbert Sasse, Group CEO of Growthpoint, adds that the company identified Poland as a core market for its international expansion because of its positive economic growth rates and appealing office-market dynamics. “It gives Growthpoint access to prime properties in the heart of thriving financial districts in major capital cities that are enjoying growing popularity with multinational tech and business outsourcing blue-chips. These markets offer positive yield spreads that are much wider than those currently found in Australia, where we also invest, not to mention South Africa where yield spreads are negative.”

Growthpoint has previously stated that its strategy is to grow its international exposure to 30% of its earnings before interest and tax as well as 30% of the book value of its properties, over the next three years. This strategy is a “multi-market diversification strategy”, which supports its commitment to provide shareholders with growing and sustainable earnings, and will require approximately R10bn in capital investment.

The new Eurobond will help raise some of this money and the company has announced that it will also issue new ordinary shares of GPRE, intended to raise capital for the expansion of Globalworth Poland. Growthpoint will invest between EUR120m and EUR150m in GPRE ordinary shares.

The joint lead managers for the issue of Growthpoint’s inaugural Eurobond are JP Morgan and Deutsche Bank and, locally, Absa and RMB acted as co-managers. The $425.0 million Eurobond matures on 2 May 2023 and carries a fixed interest rate of 5.872% payable semi-annually.

“We are pleased with the support for our Eurobond debut. It is a reflection of our prudent approach to investment, balance sheet management and governance, and an endorsement of our internationalisation strategy. The success of this transaction further strengthens Growthpoint,” Sasse says.

Image credit: http://www.growthpoint-reports.co.za/annual-report-2015/org-executive.php


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