NEPI Rockcastle, Globalworth, One United Properties, Impact Developer & Contractor are four of the largest active developers in the Romanian market who have chosen to finance their development and investment projects by issuing corporate bonds. More than €1 billion has been raised through the sale of bonds by real estate companies active in Romania over the past 18 months.
One United Properties, a real estate developer specializing in residential real estate in Bucharest, issued 20 million euros of 4-year bonds by private placement. The funds will be used to develop the company’s existing and new residential projects.
Issuing bonds is a way for governments and corporations to raise capital to expand their businesses or optimize the funding capital structure.
In addition, Impact Developer & Contractor, one of Romania’s largest residential real estate developers, sold debentures worth €30 million via BVB. The company planned to use the money to develop two new residential projects in Bucharest, in the Floreasca and Domenii areas, in addition to continuing the Greenfield project in Baneasa.
NEPI Rockastle and Globalworth, more than one billion euros
The largest bond issues were made by Globalworth Real Estate Investment Limited, the real estate investment company controlled by Ioannis Papalekas, and Nepi Rockcastle, two of Romania’s largest real estate investors.
Globalworth has invested heavily in the Romanian office segment alongside smaller projects in the industrial segment. The investor raised 550 million euros thanks to a record sale of bonds on the Irish Stock Exchange. Its portfolio in the country could reach 1 billion euros in value this year.
The net proceeds of the offering will be used to repay a portion of the company’s indebtedness and for general corporate purposes.
Nepi Rockcastle’s wholly-owned subsidiary, NE Property Cooperatief, closed a portfolio of corporate bonds and priced a €500 million seven-year unsecured Eurobond, maturing on 23 November 2024.
“Corporate bonds are now a viable alternative to bank loans, as terms have become more competitive for these instruments, especially for companies with investment grade credit ratings. The volatility of bank loan interest rates is also encouraging an increasing number of real estate companies to enter the bond market since these instruments mostly pay fixed interest rates, thus protecting the borrower against adverse movements in interest rates. . Speed of execution, depth of the bond market compared to the local banking market, collateral structure, improvement of the capital and cash flow structure, diversification of the lender base are the main advantages of this type of financing”, comments Maxime Otto, Associate Director Capital Markets Department JLL Romania.
The corporate bond market in Romania is in its infancy, but it is likely that the market will continue to expand and grow as more and more companies meet investors’ criteria in terms of financial covenants . In the meantime, more and more investors are attracted by the risk-adjusted returns of this type of instrument, especially in the context of Romania’s positive macroeconomic outlook.