UNITE Group issues 6.125% retail bond
UNITE Group, the FTSE 250-listed provider of student accommodation, has launched a seven-and-a-half-year retail bond paying a coupon of 6.125%.
The issue is available from today and is expected to close 5 December, though it may close earlier if demand is strong; UNITE is hoping to raise upwards of £50 million through the issue.
Minimum investment is £2,000 during the offer period and afterwards the bonds will be able to be bought and sold on the London Stock Exchange’s Order Book for Retail Bonds in multiples of £100.
The interest will be paid semi-annually in arrears, with payments made on 12 June and 12 December every year; the first payment will be 12 June 2013.
The bonds will be repaid at 100% of their face value on the maturity date, assuming the company remains in business and is able to pay its debts in full, and assuming the bonds have not otherwise been redeemed early or purchased and cancelled.
UNITE will have the option to redeem this issue at any time throughout the seven and a half year period, also at 100% of their face value or at an amount calculated by "reference to the prevailing yield of the 3.75% United Kingdom Government Treasury Stock due 2020 plus a margin of 0.5% together with any accrued interest".
James Martin of Investec, which is one of the joint lead managers for the bond, says, ‘We are finding this a common theme and a popular way for companies to issue debt. The issue has been raised in order to replace existing debt that is maturing shortly.’
Having floated on the London Stock Exchange in 1991, Unite has a current market capitalisation of around £423.4 million, and now has a £1.3 billion property portfolio, comprising some 42,000 beds in 130 locations in 23 university cities across the UK. It has 54% of its portfolio let out to universities under leasing agreements and 45% of capital invested in London.
The occupancy levels of its properties have average at 98% in the last five years.
This article was written for our sister website Money Observer
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.
A way of valuing a company by the total value of its issued shares and calculated by multiplying the number of shares in issues by the market price. This means the market capitalisation fluctuates continually as the value of the shares change in the market. For example, HSBC has 17.82bn shares in issue at a price of 646.2p making a market capitalisation of £115.15bn.