Financing
Debt capital markets recovered in 2009 and increased demand for corporate, mainly high-grade, debt caused credit spreads to come in to more normal levels. In the second part of the year several traditional borrowing opportunities like corporate bonds and convertible bonds came back to the market, but secured real estate financing and bank loans remained scarce. In 2009 Corio successfully raised funding by issuing shares and raising of debt. Shareholders elected to receive 63% of the dividend in shares, of which 40% (€ 70 million) was granted, and soon thereafter Corio raised € 258 million through an Accelerated Book Build share issue. In the third quarter we raised € 200 million through a 7-year Dutch inflation-linked loan and extended the maturity of three bank loans totaling € 186.2 million by approximately 3 years.
Throughout the year the Revolving Credit Facility, maturing in 2012, remained at our disposal, offering basic headroom of € 600 million. Shareholders’ equity (after non controlling interest) at year-end 2009 amounted to € 3,384.1 million (year-end 2008: € 3,458.5 million) or € 44.32 per share (2008: € 52.20). The decrease is due primarily to the downward revaluation of our assets over the year and certain disposals, but was positively affected by the equity funding. Total assets fell from € 6,408.4 million to € 6,291.2 million. Based on the current debt covenants and the portfolio value at year-end Corio has a potential borrowing capacity of € 1.2 billion (2008: 1.3 billion). This capacity is theoretical because it is limited by the availability of funds and the internal financing policy. Undrawn committed credit facilities amounted to € 540 million. Total interest-bearing loans including capitalised costs at year-end 2009 fell to € 2,363.5 million (2008: € 2,467.0 million). Cash freely available was € 91.2 million.
New loans consists of the above mentioned inflation linked loan and the € 70.5 million annuity loan, due 2019, related with the acquisition of the Príncipe Pío shopping centre.
| Net debt including swaps at year end 2009 |
|
|
|
| (€ million) |
Fixed rate |
Floating rate |
Total |
% of Total |
| Short |
5.3 |
24.6 |
29.9 |
1% |
| Long |
1,553.6 |
890.9 |
2,444.5 |
99% |
| Total* |
1,558.9 |
915.5 |
2,474.4 |
|
|
|
63% |
37% |
100% |
|
| Principal ratios at year-end |
|
|
|
|
|
2009 |
2008 |
2007 |
| Leverage |
40.4% |
40.1% |
34,0% |
| Average interest on net debt in the 4th quarter |
4.0% |
5.1% |
5.1% |
| Interest cover ratio |
3.4 |
2.6 |
3.0 |
| Average duration of debt (year) |
5.8 |
5.7 |
6.7 |
At year-end 2009, leverage was 40.4% (2008: 40.1%) and the interest cover ratio was 3.4 (2008: 2.6). Leverage is defined as total liabilities less deferred tax and creditors, divided by the balance sheet total less intangible assets. This must be below 55%.
Interest cover is defined as total net rental income and dividends received from non controlling interests, divided by interest paid (or otherwise due) less interest income, both for the past 12 months. Interest cover must be at least 2.2. The definitions for both 2009 and 2008, are based on the conditions in the US private placements. The definitions for the revolving credit facility are different and less stringent.
The average duration of debt increased to 5.8 years at the end of 2009 (2008: 5.7 years).
Source: Annual Report 2009, Chapter Overview & Strategy, page 16 (PDF, 13.679 kB)
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