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Aroundtown Issues €600 Million in Perpetual Notes At 1.625%

Aroundtown has issued a tender offer for as much as €200 million worth of perpetual notes on an existing €600 million issue, with a call date in Jan 2023, and issued in the fourth quarter of 2016 with a 3.75% coupon rate.

The notes bought will be replaced by an issue of €600 million new perpetual notes with a coupon of 1.625%. The first call for the new notes will be in July 2026. This reflects a substantial reduction in the coupon rate of the two issuances. 

The reasoning behind the tender, and the issuance of new perpetual notes, is to manage the capital in the company proactively. The tender offer will also enable holders to switch into the new issuance before the tendered notes’ first call date. The offered notes’ purchase price was determined in accordance with a modified auction procedure in the Netherlands.

Perpetual notes are equity instruments used by the company to bolster its balance sheet and equity base, and is a key part of its diverse financing source mix and conservative financial policy. Perpetual notes don’t have a maturity date and the company has the discretion to defer coupons.  It is expected S&P will maintain the existing equity content to the outstanding amount on the €600 million notes that have not been tendered yet.

S&P rates Aroundtown SA as BBB+, making it the highest rated and largest listed commercial real estate company in Germany. The corporate shares are traded under the symbol AT1 on the Frankfurt Stock Exchange’s Prime Standard. Aroundtown invests in high quality properties that generate an income and have potential for value-add. These are located centrally in large cities in Europe, primarily in Germany, the UK and the Netherlands.

Aroundtown was founded by real estate magnate Yakir Gabay.  Avisco, a company controlled by Yakir Gabay, is the largest shareholder of Aroundtown with a 10% stake.  Additional shareholders include a 5% stack held by Blackrock.

Other prominent investors include Blackrock (5%), Allianz, State-Street, BNP Paribas, Norges, the Bank of Montreal, Vanguard, Aliance-Bernstein, Japan’s Government investment fund, Dekabank, and many additional leading global investment groups.

The perpetual notes and main bond investors include GIC, ECB, Deutsche-Bank, Union-Investment, Credit-Suiss, UBS, Pictet, M&G, Credit Agricole, Toronto Dominion Bank, and several other major institutional investors.

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