| Wed 27 Oct 2004, 16:58 | | Another Absa first for local securitisation market |
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iFOUR : PROPS - Another Absa first for local securitisation market
iFOUR PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/016118/06)
Share code: IFR ISIN: ZAE000039236
(`iFour`)
PROPS - Another Absa first for local securitisation market
Absa, iFour Properties Limited and Pangbourne Properties Limited made finance
history today with the launch of South Africa`s first Commercial Mortgage Backed
Securities (CMBS) programme.
The programme vehicle, aptly named `PROPS`, is structured to allow iFour
continued operational flexibility while benefiting from direct access to the
cheaper debt available in the capital markets. The PROPS bond programme is
listed on the Bond Exchange of South Africa and will, in line with international
trends, create long-term benefits for iFour stakeholders.
`iFour`s objective on listing in June 2002 was to utilise securitised debt to
fund its A-grade property portfolio. Although not achieved at the time, the
right corporate structure established at listing and the dynamic approach
adopted by the team solved the problems originally encountered at listing. It
enabled us to underpin our strategy of delivering sustainable growth in
distribution to unit holders,` says James Nunes, CEO of iFour Properties.
`Pangbourne, which provides property management and financial administration
services to iFour assisted them in reaching their objective of securitising
their debt by providing expertise, systems and procedures. As a co-sponsor of
the PROPS programme, Pangbourne will also be able to take advantage of
securitisation which will assist it to achieve its strategic objectives which
will ultimately be of benefit to the unit holders in both companies,` comments
Athol Campbell, CEO of Pangbourne.
Demand for the securitised bonds has been unprecedented with some classes of
notes of the initial R800 million iFour issue under the R2 billion programme
being 6.5 times oversubscribed. The intense demand has also resulted in very
tight pricing in the bond auction process, surpassing the targets set by the
team and the overall cost of capital targets of iFour.
In comparison to the usual all in 2-3% credit margin typically charged by
commercial banks for commercial property loans, the Moody`s rated Aaa.za bonds
issued by PROPS achieved a credit margin of only 0.38%.
The innovative transaction was pioneered by the Capital and Debt Markets team at
Absa Corporate and Merchant Bank (ACMB) and Absa Commercial Property Finance
(ACPF), and represents a marriage of international best practice in non-tax
driven structured finance techniques with traditional South African property
expertise.
`We are very pleased with the level of innovation that the collaboration between
ACMB and ACPF has brought to the South African commercial property sector,` says
Robert Emslie, managing executive of ACMB.
`We anticipate that, as with other markets around the world, commercial property
securitisation will be widely used by most significant South African commercial
property companies within the next few years and we fully support this
initiative.`
The process of obtaining a credit rating from an internationally recognized
agency such as Moody`s for bonds ultimately secured by a portfolio of commercial
properties is also a first in South Africa.
Commercial property securitisation accounted for in excess of Euro 100 billion
of debt funding raised in the US and Europe last year alone, and is the favored
form of debt funding around the world for larger listed and non-listed property
companies. The Australian listed property sector also uses securitisation as a
preferred debt source, with over Aus$ 6 billion of debt raised in this manner
over the past five years.
Absa currently lends to the majority of the locally listed property companies
and is well placed to offer this product to the sector. Absa is also an
innovative and active player in the South African securitisation market,
recently concluding transactions such as the R3 billion CARS transaction - the
largest securitisation to date in the South African market and ABACAS, South
Africa`s first segregated series asset-backed commercial paper conduit listed on
BESA (currently sized at R4,5 billion). In August this year, the bank also
announced the issue of NBC Future Guard, a securitisation of provident-backed
home loans - the first transaction of its type in the world.
Ends
Issued by:
Errol Smith
Manager: Absa Media Services
Tel: (011) 350-5768
errols@absa.co.za
For more information, please contact:
Absa Corporate & Merchant Bank Communications
Contact: Liezl Squier
Tel : (011) 350-4291 or 083 407 6898
iFour:
Contact: James Nunes, Managing Director
Tel: (011) 889 8700 or 082 455 2283
Pangbourne:
Contact: Craig Hutchison, Financial Director
Tel: (011) 889 8500 or 083 630 8683
Absa Corporate & Merchant Bank:
Contact: Nick Job, Capital & Debt Markets
Tel: (011) 350 8389 or 082 450 6899
Absa Commercial Property Finance:
Contact: Lisa Forshey, National Manager, Specialised Finance
Tel: (011) 540 0709 or 082 411 6414
Corporate Communications Consultants
Contact: Debbie Brewitt
Tel: (011) 783 8926 or 084 616 7000
27 October 2004
