Goodman Property Trust, the NZX-listed commercial and industrial property investor, is offering to sell as much as $100 million of bonds to further diversify its funding sources and reduce bank debt.
Through its subsidiary GMT Bond Issuer, the trust is offering up to $75 million of 5 1/2 year bonds, with the ability to accept a further $25m in oversubscriptions.
The bonds would be listed on the NZX Debt Market with an expected investment grade credit rating of BBB+ from Standard & Poor's, the Auckland-based company said.
The interest rate will be set by a bookbuild on February 23, although Goodman said it would be a minimum 4 per cent with an indicative issue margin of between 1.2 per cent and 1.3 per cent.
The offer marks Goodman's fifth issue of senior secured bonds and will give it greater diversity and capacity in its finances, lifting its weighted average debt term to 4.6 years from 4.2 years at December 31, and increasing the level of its debt drawn from non-bank funding to about 68 per cent from 56 per cent.
Goodman said it will retain its bank funding to give it operational flexibility and following the bond sale expects to have around $350m of headroom within its bank facility.
Funds from the bonds, after issue costs, will be used "for general corporate purposes and to repay indebtedness" under its bank facility, it said in a briefing document on the offer today.
Goodman's property portfolio is valued at $2.6 billion, almost exclusively in the country's largest city of Auckland.
It has a programme of asset recycling, selling properties to fund further development and asset activity and currently has a look-through loan-to-value ratio of 32.4 per cent.
There is no public pool available for the bonds, with the sale arranged through the joint lead managers Deutsche Craigs, First NZ Capital Securities and Westpac Banking Corp's New Zealand branch.