Aroundtown has issued perpetual notes to the value of €600 million at the lowest coupon the company has ever offered. Investor demand for the issuance was very high strong, supported by books of worth €2B, oversubscribing the issuance by more than 3 time.
During the book building process, Aroundtown has managed to reduce the yield significantly due to the strong demand. When compressed by 0.5%, this resulted in a 1.625% final coupon. The first call date for the notes has been set for July 2026 and although Aroundtown will have the option to repay the notes at par value at this time, it won’t be obligated to do so.
The company will use a portion of the issuance’s proceeds to redeem a part of its perpetual notes with a coupon of 3.75%. These notes were the first perpetual notes issued by Aroundtown in 2016 and their first call date is in January 2023. The fact that Aroundtown has managed to reduce the coupon substantially since its first issued perpetual notes is an indication of the company improving its financial profile dramatically, which has led to a high demand for its securities.
The main investors that took part in this issuance include DWS (DB), Union Investment, PGIM, Generali Insurance, Allianz Global Investors, Neuberger-Berman, Bank of Singapore, Amundi Asset Management, Bank National Suisse, Oddo, BNP-Paribas, Pramerica, ADIA, Henderson, Invesco, and several other major global investors.
Perpetual notes are used by a company to strengthen its balance sheet and equity base. They are similar to common equities in that they don’t have a maturity date, while coupons may also be deferred at the discretion of the company. The notes may be redeemed on specific dates by the company, at its sole discretion. Aroundtown makes use of perpetual notes as a diverse source of capital, as per its financial policy.
S&P rates Aroundtown SA as BBB+, making it the highest rated and largest listed commercial real estate company in Germany. Its 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 and the Netherlands.
Aroundtown was founded by property magnate Yakir Gabay. The holding company Avisco, controlled by Yakir Gabay (יקיר גבאי), owns a 10% majority shareholder stake in the conglomerate, followed by Blackrock owning 5%. Additional notable shareholders include BNP Paribas, Japan’s Government investment fund, Norges, State-Street, Vanguard, Aliance-Bernstein, the Bank of Montreal, Dekabank, Allianz, and many other leading global investors.