REIT completes five-year, 5.1% bond to repay debt and boost investor access to rental assets
Avenue Living completed a $250m senior unsecured debenture offering on Monday, marking its first-ever bond issuance.
The Calgary-based real estate investment trust (REIT) announced the move in a press release and said it will use proceeds to refinance existing debt and support general corporate purposes, according to BNN Bloomberg.
The five-year bond carries a yield of around 5.1 percent and matures on May 12, 2030.
Jason Jogia, Avenue Living’s co-founder and chief investment officer, described the move as “a first for the company” and a first for the industry in two decades.
Jogia said the bond will give the REIT faster, more cost-effective access to capital.
“What the bond allows us to do is have access to capital that is cost effective in a more expedient basis to be more competitive in the market,” he told BNN Bloomberg.
He added that the company has grown by about 10,000 units over the past five years and views the bond as an additional tool for growth.
This just becomes another tool at our disposal,” he said, adding that it allows them to move quickly and cost-effectively in the market with institutional investor backing.
He noted that the approach also provides access to capital and opens up growth opportunities for the firm.
As an open-ended real estate income trust, Avenue Living raises and deploys capital on an ongoing basis.
Jogia explained that the bond process allowed the firm to identify debt it could retire, which would increase its pool of unsecured assets—now valued at more than $450m.
“There’s general corporate purposes, as in capital expenditure, that we will use the funds for. But also marrying these funds with our ongoing equity, we will be continuing to acquire assets,” Jogia said.
He noted the company has properties earmarked for purchase in the next two months and expects to grow its portfolio by at least 2,000 doors based on available equity and capital raised from the bond.
Avenue Living’s founder, chief executive officer, and executive chairman, Anthony Giuffre, said the offering enhances investor access to the sector while allowing the company to act more quickly in the market.
“With this offering, it allows us to become more reactive within the marketplace,” he said.
He added that it also helps the firm operate more nimbly, ensuring business processes are followed through—from acquisition to retrofit or stabilization at any asset.
Jogia added that the product offers exposure to an asset class not easily accessible to Canadian investors.
“So that just really gives them (investors) some more tools or some more offers for those investors that are looking for a fixed income type of approach,” he said.
He also pointed to the bond as part of a strategy that can help investors navigate market uncertainty.
