Bruntwood issues 6% retail bond
Property management company Bruntwood has launched a retail bond with a coupon of 6%, maturing in 2020.
The seven-year bond, which matures 24 July 2020 will pay interest semi-annually on 24 July and 24 January each year, with the first payment made in January 2014.
Bruntwood manages a portfolio of 110 office buildings, leasing to more than 2,000 businesses in the north of the country. Its property is spread across Manchester, Birmingham, Leeds and Liverpool and is valued at £891 million.
With turnover of £100 million, the company made a net profit of £12 million in 2012. Rental income accounted for £62.4 million of that turnover and occupancy rates are decent at more than 85%.
The company's future plans include expansion in Leeds and Birmingham, where it says there is significant demand, and redevelopment of the existing portfolio to increase capital values and rent.
Chief executive at Bruntwood, Chris Oglesby, says the reason for issuing the bond is diversification. "This will take us to four different sources of funding, all with different maturities ranging from two-and-a-half to nine-and-a-half years, which puts us in a very strong position."
Oglesby is hoping the issue with raise between £50 million and £70 million.
"We see ourselves as a very good fit for the bond market. We are long-term and we are very yield-focused," he adds.
Minimum investment in the retail bond is £2,000 with further purchases in increments of £100. The issue is expected to close 17 July 2013.
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%.