LONDON-The Mall fund has raised euro 1.5 billion ($2 billion) from bonds backed by retail rents.
A Mall Fund statement says that it believed the bond, which will refinance bank debt, "was the largest single piece of triple-A rated commercial mortgage-backed debt ever issued."
Lead manager Credit Suisse First Boston had priced the seven-year issue on the lines of a coupon of three-month Libor plus 18 basis points. This compared with talk in the market last week of Libor plus 16 to 17 basis points.
But a supply surge hit the issue. According to one analyst, in the first quarter of the year an investor had a choice of three deals at a time. Now there are 10 including the euro 2 billion ($2.7 billion) worth of bond issues backed by UK shopping mall income from German real estate lender Eurohypo. Even so, demand was sufficiently strong for the Mall Fund to set a new record.
The euro 2.9-billion ($3.8-billion) billion Mall Fund has 22 properties at present and the new bond is secured on 20 of them. Capital & Regional holds a 26.9% stake in the Fund. Morley, a subsidiary of insurer Aviva, manages over euro 21.9 billion ($28.6 billion) of UK property assets.
The fund plans to continue expanding. "We are looking forward to continuing to grow the Mall's portfolio pushing towards our target of 30 community shopping centres across the UK within three years," Ken Ford, chief executive of the Mall Fund, says.
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