Judging by the deals that have been announced so far, corporate financing in 2013 is a continuation of what happened in 2012: investors can?t seem to get enough of real estate.
On the first full working day of 2013, two real estate issuers chose to raise capital. Both issues, one for equity and the other for debt, were blow-outs. And both were the first corporate deals done in Canada for 2013.
? True North Apartment Real Estate Investment Trust is raising about $55-million of equity via the sale of 13.9 million subscription receipts at $4 per receipt. And there?s the prospect that the deal could end up about $8-million larger if the underwriters (CIBC World Markets and Raymond James) exercise the over-allotment option. The capital raised will be used to help fund $152.8-million of properties that True North is purchasing in Ontario, specifically Toronto and Peterborough. The rest of the purchase price will come from assumed and new mortgages.
The issuer is selling subscription receipts, which will convert to equity if and when the acquisition of the almost 800 apartments closes. The acquisition is expected to close prior to March 1, 2013.
True North Apartment REIT is new having been formed last year. Prior to its current acquisition, it owned about nearly 4,000 units spread across four provinces.
? First Capital Realty, a real estate issuer but not a REIT, raised $100-million of debt capital through a reopening. The company initially planned to raise $60-million from an offering that will mature on Dec. 5, 2022. The original issue was completed about six weeks back when investors provided $150-million of 10-year money. Accordingly the float is now $250-million. The bonds, which are investment grade, carry a 3.95% coupon but because they were priced at a discount, the yield to maturity was 4.076%. At that yield the bonds were priced at a spread of 214 basis points over comparable Canada bonds. That lower spread may have been a factor in First Capital returning to the market: its original issue was done at a spread of 230 basis points over comparable Canada bonds.
Source: http://business.financialpost.com/2013/01/08/real-estate-issuers-kick-off-2013-financings/
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