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Bruntwood's Hatch pop-up scheme in Manchester

Bruntwood raises £90m in latest bond

Sarah Townsend

The Manchester-based developer’s second retail bond is intended to diversify the company’s funding base as it looks to ramp up investment in UK cities.

Bruntwood on Thursday said it raised £90.87m through the retail bond, which was “significantly oversubscribed” reflecting the strength of the market.

The raise reduces the loan-to-value rates of Bruntwood’s existing secured debt facilities with banks. It included both a cash offer, which raised £58m, and exchange for holders of the firm’s existing secured retail bond, which matures in 2020, equating to an additional £32.9m.

Bruntwood’s first retail bond, which launched in 2013, offered a 6% rate over seven years until 24 July 2020.

Chris Oglesby, chief executive of Bruntwood, said: “While our first bond in 2013 proved to be a success, the demand we’ve seen from investors for a second time really demonstrates the positive outlook for the market and is testament to the strength of our business.

“Through this issue we have been able to diversify our funding base, which means we can better manage risk across our portfolio and create further headroom in our secured facilities…This bond will allow us greater flexibility as we continue to invest in the UK’s thriving cities.”

Bruntwood’s property portfolio is valued at £1.4bn. In 2017, the company launched a £50m ‘Pioneer’ investment programme to retrofit city-centre buildings, and in 2018 formed Bruntwood SciTech, a 50:50 joint venture with property fund L&G to help grow the UK’s technology sector through the development of a portfolio of science and research parks.

The JV aims is to expand the portfolio to more than 6m sq ft with a valuation of above £2.5bn in the years ahead, it said in its annual results announcement this January.

Bruntwood posted a 55% pre-tax profit drop to £52m for the full-year 2019, attributed to a profit spike the previous year when it formed the SciTech joint venture.

Turnover in 2019 rose 16.6% to £160m, from £137m, and the total value of the company’s assets grew to £1.4bn from £1.3bn in 2018.

Chatham Financial advised on the retail bond issue, while City and Continental, which operates as Allia C&C, and Peel Hunt acted as joint lead managers and Freshfields Bruckhaus Deringer as legal advisor.

Adrian Bell, chief executive of Allia C&C, said: “Investors in the [retail bond] market have a strong appetite for property company issues and Bruntwood’s track record meant existing investors were comfortable to exchange the existing secured bond for the new higher yielding bond, which is not secured over real estate.”

 

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Major regional success story this company long may it continue.

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