Allied Properties Raises $400 Million in Debentures Offering
Allied Properties Completes Significant Debenture Offering
Allied Properties Real Estate Investment Trust (“Allied”) (TSX:AP.UN) has successfully finalized its offering of senior unsecured debentures, raising an impressive $400 million. This private placement was executed in specific provinces of Canada, marking a notable achievement for the company.
Details of the Debenture Offering
The total offering comprises two distinct series of debentures. The first series, consisting of $150 million in total principal, features the series L senior unsecured debentures. These debentures carry an interest rate calculated based on Daily Compounded CORRA plus 1.80% per annum, with payments made quarterly in arrears and scheduled to mature on April 7, 2027. The second series includes $250 million in series M debentures that will yield a fixed interest rate of 4.312% per annum, also maturing on the same date.
Interest Rate Management Strategy
In a strategic move, Allied has engaged in an interest rate swap agreement concerning the floating rate on the Series L Debentures. This arrangement effectively establishes a fixed interest rate of 4.258% for the duration of these debentures, providing predictable financing costs for the company.
Purpose of the Funds
With the net proceeds from this offering, Allied has outlined its intention to use the funds to prepay an existing $400 million unsecured term loan that is due on October 22, 2025. This decision reflects Allied's commitment to maintaining a solid financial posture and optimizing its capital structure.
Credit Ratings and Debt Structure
The newly issued debentures have received a “BBB” rating with a negative outlook from Morningstar DBRS. Importantly, these debentures rank equally with all other unsecured indebtedness that Allied has not subordinated, which signifies a strong standing within the company's overall financial commitments.
About Allied Properties
Allied is widely recognized as a prominent owner-operator of distinctive urban workspaces located in major Canadian cities. The company's mission centers on provided workspace that promotes sustainability and fosters human wellness, creativity, connectivity, and diversity. Allied's vision emphasizes a continuous commitment to enhancing cities and cultural environments, inspiring a sense of community and humanity among all individuals.
Investment and Market Position
This successful debenture offering not only strengthens Allied’s capital but also reinforces the company’s position as a leader in urban workspace development. By managing its financial costs effectively and reinforcing its asset base, Allied is poised to explore further growth opportunities.
Frequently Asked Questions
What is the total amount raised in the debenture offering?
Allied Properties raised a total of $400 million in its recent debenture offering.
How is the interest rate structured for the debentures?
The series L debentures have a floating interest rate based on Daily Compounded CORRA plus 1.80%, while the series M debentures have a fixed interest rate of 4.312%.
What will the proceeds from the offering be used for?
Allied intends to use the net proceeds for prepaying a $400 million unsecured term loan due in the near future.
What is the credit rating for these debentures?
The debentures are rated “BBB” with a negative trend by Morningstar DBRS.
Who are the key agents involved in this offering?
The offering was co-led by top financial institutions including BMO Capital Markets, Scotiabank, RBC Capital Markets, CIBC Capital Markets, along with TD Securities.
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