Financing Real Estate Project through Bond Issue
The issuance of hybrid bonds with a prospectus is suitable for project types where there is a defined exit and resulting returns. Simply put, a purchase is financed by a bond/debenture issue and the issuer shares the proceeds from the sale with investors in the form of a variable yield.
Hybrid Bonds with Prospectus
EUR 15 m
The total amount of the hybrid bond issue with a prospectus of EUR 15 m was subscribed in six months from the date of the subscription thanks to the real estate agency’s own marketing activities.
PROJECT FINANCING FOR APARTMENT BUILDING
A real estate agency required capital for the purchase of an apartment building, its reconstruction and the subsequent sale of individual apartments.
SOLUTION
Due to the market situation, we proposed that the estate agency finance the project by issuing hybrid bonds/debentures with a prospectus. This means a bond coupon of 2% p.a. (guaranteed part for investors) + a variable part, which is linked to the proceeds from the sale of all the residential apartments and can be up to 6% p.a., which will be paid at the end of the whole transaction.
IMPLEMENTATION
After signing a contract, we prepared a prospectus for the hybrid bond, which was subsequently approved by the central bank, including a request for notification of the bond issue in selected EU countries. The estate agency found subscribers for the hybrid bond issue itself.