The annual coupon price in the January four-year tranche was set at 0.875% compared to 0.625% for the five-year green CTP bond issued in September 2021, reflecting rising market rates based on higher inflation expectations. The company's average debt costs have fallen to 1.14% from 1.19% since September 2021. CTP's debt maturity is now 5.9 years compared to 6.2 years.
In 2021, CTP was the largest issuer of ESG-certified debt in the European real estate sector, with a total value of € 2.5 billion, spread over five separate tranches during the year, including the lowest coupon ever achieved at 0.5% for a real estate company with assets focused on markets of Central and Eastern Europe.
Richard Wilkinson, CTP's Chief Financial Officer, said: "CTP decided to return to the capital markets in early 2022 to secure competitive prices for our rapidly expanding sustainable industrial and logistics asset development fund and to secure our funding for the rest of the year. We believe that with rising interest rates and higher inflation expectations that are anchored in the bond markets, this was the right time to issue our eighth bond. We are very pleased with the demand from investors and the price level we have achieved in one of the busiest periods in the history of the European bond market. We saw greater demand than before, with around 90% of all investors with a green investment focus. This demand highlights the attractiveness of CTP in terms of sustainability as the only European issuer of industrial and logistics real estate with a 100% sustainable portfolio certified by BREEAM. "
The new debt issue reached a wide institutional distribution, selling mainly to asset managers (66% of the € 700 million issued), with the largest group of buyers coming from the Benelux (28%), closely followed by the United Kingdom / Ireland (24%) and then DACH region (19%) and France (16%).
Part of the proceeds will be used by CTP to finance a concomitant € 168 million tender (€ 500 million outstanding) of 2.125% of bonds due in October 2025. The balance will be used to cover CTP's total estimated financial needs for its development fund in 2022, resulting in the company will increase its portfolio to a target of 10 million m2 GLA by the end of 2022, a year earlier than the target set for its IPO in March 2021.
All CTP development activities are performed according to the BREEAM standard, "Very Good" sustainability standard or higher, in accordance with the company's commitment to be a sustainable company. The capital will also be earmarked for the prepayment of more expensive debt of approximately EUR 350 million, averaged around 2.4%, held by Deutsche Industrie REIT ("DIR"). CTP is in the process of acquiring DIR and has committed to fund a major overhaul of its industrial and logistics real estate management portfolio in Germany to meet modern sustainability standards.
"CTP starts 2022 in a strong financial position. We now have the financing to comfortably cover the projected costs of our development fund until the end of the year at highly competitive prices, reflecting the strong institutional demand for CTP green bonds, despite the rising interest rate environment. We are also well positioned to use this capital to restructure and significantly reduce the debt costs of Deutsche Industrie REIT as we integrate its portfolio into CTP Germany. Our dynamic growth model can be established in the markets of Central and Eastern Europe and beyond, ”adds Jan Evert Post, Head of Finance and Investor Relations at CTP.