Neinor Homes has completed its second bond issue, increasing the initial target amount to 325 million euros, with a maturity of 5.25 years (2030) and a cost of 5.875%, excluding the interest rate derivative signed in 2022, as announced by the company, which points out that However, this implies an improvement in Neinor’s overall cost of debt of 62.5 basis points.
“We are very satisfied with the result of this issue, where institutional investors have, once again, supported the company, reflecting confidence in our execution capacity, financial discipline and vision to anticipate investment cycles in the Spanish residential market” says Borja García-Egotxeaga, CEO of Neinor Homes.
“Over the last 18 months we have demonstrated precisely this by divest 275 million euros in build-to-rent assets to capital core, raise and deploy €800 million in capital with opportunistic investors and now raise almost 500 million euros of corporate debt from local banks and institutional investors – these different funds have directly or indirectly supported Neinor’s capital markets strategy, providing a total return of +60% YTD to our shareholders,” he notes. the manager.
He bond has received a BB- rating from Fitch and Standard & Poor’s, while the corporate rating ands B+.
“These ratings illustrate a positive outlook for housing demand in the Spanish market, supported by the strength of the economy and improving affordability,” highlights the developer. According to the Bloomberg consensus, the Spanish economy is expected to grow by 2.8% and 2.1%, clearly outperforming the Euro Zone in general, whose growth is expected to reach 0.7% and 1.2 %, respectively.
One of the main strengths highlighted by the rating agencies was the visibility in the coming years thanks to its solid order book, with 1,761 pre-sold homes, valued at more than €600 million in future income (June 2024).
As explained earlier this week, the company plans allocate €175 million to amortize its existing corporate debt facilities. Furthermore, Neinor seeks increase its corporate debt by 150 million of additional euros to fund new growth opportunities that may arise in the future, either through the company’s own acquisition program or opportunities with its co-investors, where it still has up to 400 million euros available to be deployed.
As of June 2024 and adjusted for the 75 million euros in dividend payments executed, Neinor features a prudent loan-to-value (LTV) ratio of 19%. Additionally, through this issuance, the company will also extend its debt maturities from approximately two years (2026-27) to more than five years (2030), improving cash flow generation in the coming years.
The bond was well received by investors, being oversubscribed 4 times, reflecting a growth-oriented use of funds in a highly favorable macroeconomic environment where there is a structural shortage of housing supply.
Invest 100% of net income in green projects
The company has issued its second green bond and has committed to invest an amount equivalent to 100% of income in Eligible Green Projectsas defined in its Sustainable Financing Framework updated in 2024. These projects will be fully aligned with the Substantial Contribution Criteria of the European Taxonomy for Green Buildings – new construction activity and will contribute to the Sustainable Development Goals (SDGs), encouraging thus sustainability through a reduction in the carbon footprint of buildings during the construction phase and state-of-the-art energy efficiency standards to reduce emissions during the life cycle.
In addition, some of the projects will also meet social objectives by increasing both rental and sales supply in a market where there is a structural deficit in housing, particularly affordable and social housing.
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