Grand City, TAG top up financing with fresh bond issues

Two German listed companies tapped the bond markets successfully again over the past few weeks, as financing via bonds continues to find favour. TAG Immobilien and Grand City Properties, both hungry to acquire further residential property portfolios, were the latest to raise fresh funding on the bond markets.

The fast-growing Grand City Properties, which specialises in buying and upgrading undervalued housing in German’s larger cities, has increased a €150m secured convertible bond by €125m to finance new acquisitions, and said it is in the final stages of negotiations on several portfolios worth €250m.

The Luxembourg-registered company said it raised its series C convertible bond by €125m nominally, fixing the emission price at 111.25% of nominal value plus cumulative interest, for €140m in proceeds, which will be used to finance acquisitions. In April, the firm increased its seven-year 6.25% bond tap issue for the second time due to strong investor demand. It boosted total issuance by €50m to €350m after raising the original €200m issue by €100m.

The company’s share price has doubled since its listing last year, during which time the group also doubled its residential holdings to 26,000. It says it has a further €300m of immediate investments in its pipeline.

Meanwhile the Hamburg-based TAG Immobilien, fresh from disposing of its remaining commercial property holdings to concentrate on being a full-time residential specialist, also issued a corporate bond in the amount of €125 million through a private placement with institutional investors. The bond matures on 25 June 2020, pays a coupon of 3.75%, and is traded in the Open Market of the Frankfurt Stock Exchange. The proceeds from the bond will primarily be used “to finance TAG's continued growth”, said the company. TAG has now issued a total of €435m in bonds