DERWENT London yesterday announced plans to launch £150m of unsecured convertible bonds, as it looks to lower debt costs and fund developments.
The West End property firm said the move would help to extend maturities and provide “an appropriate mix of secured and unsecured debt, taking advantage of current favourable market conditions”.
It also plans to use the proceeds to refinance £93m of acquisitions made in the last 12 months and fund its vast development pipeline.
Derwent, led by property veteran John Burns, has a capital expenditure programme of around £400m and is currently on site at projects spanning over 400,000 square feet.
These include Turnmill in Farringdon and 40 Chancery Lane, both of which it pre-let last month to Saatchi and Saatchi owner Publicis.
It also recently decided to kick start its White Collar Factory scheme near Old Street next year on a speculative basis.
The bonds, due in 2019, will be issued at face value and are expected to carry a coupon of between 1.25 per cent and 1.75 per cent per year.
The initial conversion price – the price at which the bond can be converted into stock – is expected to be set at a premium of between 30 per cent and 35 per cent above the volume weighted average price of the shares from launch to pricing on 17 July, Derwent said.