29th Nov

Places for People Returns to ORB with a 2023 Bond Paying 4.25%

As the sands run out on what has been a less than prolific year in terms of issuance, Places for People has delivered a little pre-Christmas cheer for investors starved of retail bonds by announcing a seven year sterling bond offering 4.25%.  

Investec  is lead manager on the issue and demand is likely to be strong with more brokers supporting it in response to high demand from customers seeking income; Barclays Stockbrokers, Hargreaves Lansdown, Interactive Investor, Redmayne-Bentley, Saga Sharedealing, Selfrade, Shareview and Walker Crips are all participating in what is just the fourth issue on the Order Book for Retail Bonds in 2016. 

Places for People Group is one of the largest property and leisure management, development and regeneration companies in the UK; it owns or manages 150,000 homes and has assets in excess of £3.1 billion. Its products and services are socially and commercially driven - as a not-for-dividend organisation, any profit it makes is re-invested in the business. 

The bond is issued by a wholly owned special purpose company, Places for People Finance Plc; it is available with a minimum investment of £2,000 and in multiples of £100 thereafter. The book is now open and planned to be so until noon on Monday 12th December subject to demand; maturity is on 15th December 2013 with coupons being paid on 15th June and 15th December each year until then.

David Cowans, Chief Executive of Places for People, said:   ‘We are delighted to announce the launch of this Retail Bond. The funds raised will enable us to further our work in the property management, leisure management, development and construction sectors via our Operations Group, as well as to diversify its sources of funding.   This will support us in bolstering our award winning leisure management business, continuing to grow our property management businesses, helping to deliver the new homes that the UK desperately needs and creating more high quality, safe and sustainable communities.’ 

Established in 1965, Places for People (PfP) works with local communities to plan, build and manage high quality places which are environmentally and economically sustainable.   

The Guarantors' principal activities are summarised below:   

PfP Operations - Ownership of retirement, development, leisure and property management Companies.  

PFPL - Management of local authority owned leisure facilities; it employs approximately 9,000 people and manages over 100 leisure centres with 30 million visits per year.   

RMG - Management of residential housing in the private and public sectors; 76,402 leasehold properties under management in the private sector and a contracted order book of 24,919 units under construction. RMG mainly looks after purchased properties that are under leasehold.   

Touchstone - Provision of private rented sector property management services including a whole variety of different types of stock – new build, purpose built properties or conversions. Touchstone manages 18,484 properties for institutional and corporate investors, retailers and buy to let mortgage lenders.   

Zero C - Construction and development of residential and mixed use developments; it is resourced to deliver in excess of 200 homes a year and has consents or subject to planning options for over 1,500, low cost, sustainable homes, offices and commercial buildings.   

At £210 million in 2016, retail bond sales on ORB are a little over half of the £394 million issued in 2015 and PfP will be just the fourth to come to market this year.   

PfP has not announced a target for its raise, but the recent trend has been towards smaller issues and lower coupons; litigation finance company Burford Capital bucked the trend in April when it printed £100 million of eight and a half year bonds offering 6.125%, but the other two issues this year have been £80 million by Alpha Plus and £50 million by Charities Aid Foundation each at 5%.   

On July 25th Moody’s downgraded PfP’s rating from A2 to A3 because in its view the company’s continuing diversification ‘introduced varying risks that are atypical of an English housing association’; however, that appeared to do it little harm as two weeks afterwards PfP issued a £400 million bond that was two and a half times oversubscribed.  

For more information see Current Issues

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