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Property investor Pallas Capital pitches $100m bond offer

Australian Financial Review .

Yield-hungry investors will soon be able to get their teeth into a brand new commercial property-backed bond. Street Talk understands Sydney-based real estate outfit Pallas Capital is fronting fixed income investors with a tradable wholesale bond issue to raise up to $100 million.

Property investor Pallas Capital pitches $100m bond offer

Pallas has pitched the bond to funds in the past fortnight, offering a 7.5 per cent annual yield – payable quarterly – over a four-year term.

Proceeds would be used to fund a warehouse facility comprised of a bunch of first mortgage loans for boutique property developments in Sydney and Melbourne. The bond would have a 65 per cent maximum loan to value ratio and comes with a 5 per cent capital buffer – tipped in by Pallas’ directors – that Pallas would draw if it needed to meet financial obligations to noteholders.

The Australian Bond Exchange was acting as placement manager on the deal, according to a flyer in front of investors and seen by this column.

It is understood Pallas has already run a soft bookbuild for the offer and expects to meet its initial $30 million issue on Monday next week, when the bond officially launches.

The deal would remain open for a few months after that date and would be capped at $100 million.

Pallas has form putting these types of offers to investors, however in the past it has opted for unlisted trust structures. This deal is the first time Pallas has turned to a tradable bond – and the firm spent six months or so figuring out how to structure the offer.

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