One of the UK’s largest and most successful regional property companies, Bruntwood, has raised £90.87million through the issue of its second retail eligible bond.

The bond, which was significantly oversubscribed, included both a cash offer, which raised £58 million, and exchange for holders of the firm’s existing secured retail bond maturing in 2020, which provided an additional £32.9 million. Retained bonds of £19.13 million were also issued. It will reduce the LTV rate of existing secured banking facilities and diversify Bruntwood’s funding base.

Bruntwood, which has a property portfolio valued at £1.4billion, was founded in 1976 and provides high quality office space and a network of innovation districts for the science and technology sector across Greater Manchester, Leeds, Liverpool and Birmingham.

In 2018, the business heralded a landmark year following the launch of a £50 million investment programme to transform several of its landmark city-centre buildings.  It also marked the creation of Bruntwood SciTech – the UK’s first dedicated property platform for the science and technology sector, which has assets of £438million.

Chris Oglesby, chief executive of Bruntwood, said: “While our first bond in 2013 proved to be a success, the demand we’ve seen from investors for a second time really demonstrates the positive outlook for the market and is testament to the strength of our business.

“Through this issue we have been able to diversify our funding base, which means we can better manage risk across our portfolio and create further headroom in our secured facilities. Our investors have played a big part in our continued success and development over the last seven years and the success of this bond will allow us greater flexibility as we continue to invest in the UK’s thriving cities.

“We are embedded in the fabric of our four key cities, investing in their future and working together with their leaders on strategies that will help them to thrive. With rebalancing the UK economy top of the agenda for local and central government, and the science and technology sectors at the heart of future growth, we are in the optimal position to help regional cities reach their potential”.

Chatham Financial advised on the transaction.

Jackie Bowie, Managing Director, Real Estate & Co-Head of Europe at Chatham Financial, said: “We were delighted to advise our long-standing client Bruntwood on this innovative transaction. It is the first time a transaction of this kind has been launched in the public market by a private company without providing security over real estate and therefore allows Bruntwood to preserve its assets, and use the liquidity provided by the bond to continue its growth strategy.”

City and Continental Ltd, which operates as Allia C&C, and Peel Hunt LLP acted as Joint Lead Managers on the issue.

Adrian Bell, CEO of Allia C&C, commented: “Investors in the ORB listed market have a strong appetite for property company issues and Bruntwood’s established track record meant existing investors were comfortable to exchange the existing secured bond for the new higher yielding bond, which is not secured over real estate. Further, the structural subordination has allowed a very flexible capital funding solution for Bruntwood.”

Scott Beattie, Head of Debt Capital Markets at Peel Hunt, added: “We are delighted to have worked with Bruntwood to further strengthen the Group’s balance sheet. The additional funds provided by our investors into the Group’s second retail eligible bond will provide a solid platform to continue Bruntwood’s already successful growth strategy.”

A team at Freshfields Bruckhaus Deringer led by Duncan Kellaway and Greg Garfield advised the issuer on legal aspects of the transaction.