JSE-listed property and investment holding company Growthpoint Properties announced it had accessed a further R969 million from the debt capital markets as part of its five billion rand commercial mortgage backed securitisation programme.

The slew of corporate debt issues in the past two weeks, including one billion rand from Sappi, was widely expected to improve conditions in South Africa's bond market as it was expected to stir some interest.

However, while some of these issues went reasonably well, selling out of London by one major bank and by foreigners generally has pulled yields much higher in the government bond market as sell-offs have been the order of the day.

Growthpoint, though, reports that it had 'exceeded expectations' with the successful acquisition of the R969 million.

It could be viewed that with such a large sell-off in the bond market and with some issues struggling a week ago to raise anywhere close to a billion rand, this issue went well.

However, the company received the benefit of a calmer bond and rand market Tuesday as talk of an inter-MPC meeting on rates in SA dwindled and the big selling out of London abated.

On Monday the Bond Exchange of South Africa announced it had granted a financial instrument listing to Growthpoint worth R672 million (class A1 note) as well as three B1, C1 and D1 notes and with a scheduled maturity on August 1 2011 and a settlement date on Wednesday (28 June).

"An all in cost of fixed rate debt funding of 8.48% was achieved, which is even more affordable than the originally anticipated 8.5% to 8.75% and also betters Growthpoint's initial issue of R805 million in November 2005 which achieved an all in fixed rate of 9.34% and weighted average margin of 0.47%" says Nick Job, Head of Investec Debt Capital Markets structurer of the programme.

Growthpoint says they managed to achieve these fixed rates which are more than 1% lower than the fixed rates that can be achieved today, by pro-actively taking out forward starting fixed rate swap contracts in February 2006 and December 2005.

Norbert Sasse, CEO of Growthpoint Properties notes that "this securitisation will benefit Growthpoint's linked unitholders with increased distributions.

Additional benefits include the lowered average cost of borrowings and the increased competitive advantage of Growthpoint to make value-enhancing acquisitions."

Growthpoint says this issue is secured by 25 prime investment properties across South Africa valued at over R1.7 billion.

Sasse attributes the favourable rates achieved to both the quality of properties and Investec Property Group's property management as well as the efficient manner in which the transaction was executed by the Investec Debt Capital Markets team, lead arranger and manager of Growthpoint's securitisation.

Growthpoint has stated that accessing the debt capital markets through securitisation is central to its future funding and, following the success of the first two issues, Sasse anticipates a further one billion rand issue before the end of the year, underpinned by the bulk of the Metboard Properties Limited property portfolio.

Metboard, with its prime industrial portfolio valued at approximately R2.2 billion, is to be consolidated into Growthpoint with effect from June 30 2006 with all the conditions and approvals precedent for this transaction now fulfilled, the company announced.

Growthpoint is South Africa's largest JSE-listed property holding and investment company with property assets exceeding R13.5 billion.

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