Avenue Living announced that it completed its first bond offering on Monday, which the company says will help pay off debt and acquire assets.
The Calgary-based real estate investment trust (REIT) announced the completion of the $250 million senior unsecured debenture offering in a press release Monday. The five-year bond will yield around 5.1 per cent, maturing May 12, 2030. Jason Jogia, the co-founder and chief investment officer at Avenue Living, said in an interview with BNNBloomberg.ca Monday that the move marked a “first for the company” and a first for the industry over a two-decade period.
“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 said, noting that the company has been focused on expanding, adding about 10,000 units over the past five years.
“This just becomes another tool at our disposal. We can go into the market quickly, efficiently, in a cost-effective manner, with institutional investor support (and) be able to raise capital, give those investors access to this sector, and at the same time give our firm access to further growth opportunities.”
According to the release, the proceeds from the bond offering will be used to refinance existing indebtedness and for general corporate purposes.
Jogia said that since Avenue Living is an “open ended real estate income trust” it raises capital on an ongoing basis and deploys it into things like acquisition capital investment operations.
“As we worked through this bond offering, we recognized that there was some indebtedness that we could pay off to increase our pool of unsecured assets, which today sits north of $450 million. 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,” he said.
“So, we have some assets that are currently earmarked for purchase over the next two months, and we believe the firm will grow by at least 2,000 doors just based on equity in hand and our capital that we’ve raised here.”
Anthony Giuffre, the founder, chief executive officer and executive chairman of Avenue Living, said in an interview with BNNBloomberg.ca Monday that having the institutional grade offering will allow investors to gain exposure to the industry, while allowing to the company to be nimbler.
“With this offering, it allows us to become more reactive within the marketplace, as well as to be more nimble organizationally, to ensure that we actually are walking our business processes through, whether that is the acquisition to either a retrofit or a stabilization phase at any given asset,” he said.
Jogia said the bond offers investors exposure to a sector they “otherwise cannot invest in domestically here in Canada” while providing the company access to capital.
“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.
Jogia also highlighted it can provide investors with a defensible strategy amid market volatility.
