Argosy Property Ltd opened its second issue of green bonds yesterday, again for up to $100 million.
The offer – $75 million of senior secured fixed rate 7-year green bonds plus oversubscriptions – is open to New Zealand retail & institutional investors. There’s no public pool.
The bookbuild to set the interest rate will be conducted on Friday, when Argosy expects the offer to close, and the bonds will be allocated on Tuesday 29 October.
The minimum subscription is $5000 and the interest rate will be no less than 2.85%/year. The indicative margin range is 1.75-1.95%/year.
After the NZX-listed company issued its first green bonds in March, it cancelled $100 million of bank facilities that were due to expire in October 2021.
The company again intends to use the proceeds of the bond offer to refinance bank debt that supports “green assets” – office, industrial or retail buildings, including upgrades, that meet certain criteria Argosy has established in its green bond framework.
Argosy has completed 3 projects using green bonds – 15-21 Stout St in, Wellington, 82 Wyndham St in Auckland & a Highgate Parkway industrial building occupied by Mighty Ape, overlooking State Highway 1 from the back of Millwater on the Hibiscus Coast – and has 2 more underway.
The new projects are the Statistics NZ head office building at 8-14 Willis St in Wellington, for which Argosy is targeting a 6-star green star rating, and 107 Carlton Gore Rd, Newmarket, occupied by the Housing Corp, where it’s targeting a minimum of 4 green stars.
On completion of those 2 projects, Argosy will have $353 million of buildings with certified green star ratings out of a total portfolio valued at $1.67 billion.
Following the second round of green bonds, the company expects to reduce the $350 million of bank debt that was due to expire in 2022 to 2 tranches of bank debt, each of $125 million and expiring in 2024 & 2025, and 2 $100 million tranches of green bonds expiring in 2026 & 2027.
The green strategy
In its environmental strategy, Argosy says: “The impact of Argosy’s property investment business on the natural environment is an increasingly important consideration for investors, tenants & other stakeholders.
“Our environmental strategy reflects our ambition to create vibrant sustainable workplaces for our tenants. We believe that green buildings have the potential to provide a number of key business benefits including: increased marketability, higher rental rates, lower operating costs, higher occupancy, improved worker productivity, occupant health & wellbeing and lower regulatory risk.
“We believe that an integrated design approach, where experts & tenants are involved from the pre-design stage through to occupancy, can greatly assist in the reduction of green development costs. We are a member of the NZ Green Building Council, which is dedicated to promoting the benefits of sustainable buildings.”
10 September 2019: Mighty Ape’s warehouse wins top green rating for Argosy
29 March 2019: Propbd on Q F29March19 – SkyCity Darwin sale, Argosy switches debt
Attribution: Company release.