Another large listed property company is tapping into investors’ desire for better returns than bank deposits with an up to $150 million “green” bond offer.
Property company Argosy Property has launched its third green bond offer to raise up to $150m after announcing a purchase of $76m of Auckland industrial property for redevelopment under its “green” strategy.
Argosy said the minimum interest rate on the green bonds would be 2.2 per cent and the bonds would have a seven-year term maturing in October 2027. The company would issue up to $125m of the bonds with the ability to issue another $25m if there was demand.
The money raised would be used to refinance existing bank debt that supported “green assets”.
The company’s “Green Framework” sets out its commitment to redeveloping properties to achieve a Green Star “Built” rating of at least four stars or a NABERSNZ energy efficiency rating of at least four stars for a base building or whole building.
Two other listed property companies have issued bonds recently, like Argosy swapping bank debt for debt to investors.
In August Investore Property raised $125m from issuing seven-year bonds to investors with a 2.4 per cent interest rate and Goodman Property Trust raised $150m from 10-year bonds carrying an interest rate of 2.56 per cent and another $50m was raised from eight-year bonds carrying an interest rate of 2.26 per cent.
The Argosy bond offer is expected to close on Friday, October 16 and the bonds are expected to be issued on October 27. The minimum amount that may be bought is $5,000 and in multiples of $1,000 thereafter. Interest payments were to be made quarterly.
Argosy has a portfolio of office, industrial and large format retail properties worth $1.84 billion, with almost all in the North Island. About 42 per cent of the portfolio is industrial and 43 per cent is office buildings.
Seven buildings in its portfolio are “green”with an average of five stars with a combined value of $283m, just over 15 per cent of its porfolio. That does not include the redevelopment of 8-14 Willis Street in central Wellington which is scheduled for completion in February 2022.
Argosy announced late last week the unconditional purchase of two contiguous industrial sites for $76m in Mt Wellington, Auckland.
The purchase comprised two titles totalling 10.6 hectares of land and about 23,000 square metres of buildings which were occupied by two tenants. The net rent income was $3.55m and settlement was in late March.
“The acquisition of the Mt Richmond Properties fits with our green development strategy and affords us flexibility to support the growth of existing tenants’ needs and potential new tenants,” Argosy chief executive Peter Mence said.
The sites were close to the Auckland CBD with strong arterial network connections.
“The redevelopment potential of the large sites provides Argosy with the opportunity to create long term value and drive earnings and capital growth. Ultimately, this will help underpin sustainable dividends for shareholders,” Mence said.
In addition, the Willis Street project would now include an 11th floor at an additional cost of $6.8m, he said. The completion date would be extended by six months until February 2022.
Argosy was also continuing to work with its insurers on its $61.9m claim for material damage and business interruption costs for the Waterloo Quay building in Wellington damaged in the Kaikoura earthquake.
Source: Stuff