CENTRAL London property group Derwent embarked on a money-raising drive to pay for acquisitions yesterday, selling off part of its Covent Garden estate and issuing £175m worth of convertible five year bonds.
Derwent sold five properties in King Street and Floral Street to Capital & Counties, who paid for the £68m purchase in cash from its own share placing earlier this month.
Tenants in the properties include F&C Asset Management and Carluccio’s restaurant.
Derwent chief executive John Burns said the price paid was “significantly above” the valuation given to the properties in December.
Derwent’s bankers have also placed £175m of convertible bonds, which have an annual coupon of 2.75 per cent.
“The bonds have been priced at the top end of the premium range and the transaction was substantially oversubscribed at that level,” added Burns.
“We’ve got a big development pipeline to fund over the next few years and we’re keen to look at new acquisitions. We’ve also got substantial refinancing in 2013,” added finance director Damien Wisniewski in a conference call.
Derwent said in its interim management statement yesterday morning that open market lettings have been strong so far this year, with rents at the end of March 8.3 per cent above those seen in December.
ADVISERS: DERWENT’S BOND TEAM
DERWENT used long-time broker and adviser UBS to jointly run its £175m convertible bond sale.
Leading the team at UBS is Tim Guest, head of real estate. Guest is a qualified solicitor who first worked at Lovells before joining Morgan Grenfell, now part of Deutsche Bank, to work in corporate finance. Guest has been with UBS for more than 20 years, and is also a member of the investment committee at Apache Capital Partners.
Also acting as joint bookrunner is HSBC, with a team led by global head of equity-linked origination Phillippe Dischamps.
Dischamps has been with the bank for just short of a year, having worked for RBS and ABN Amro beforehand. He is also known for his 20 years in capital markets at JP Morgan.
JP Morgan Cazenove and RBS Hoare Govett are acting as joint global co-ordinators and joint bookrunners. Julian Hall, head of EMEA equity-linked orgination, and equity capital markets vice president Rupert Snuggs lead the RBS Hoare Govett team.