Land Securities buys £502.3 million of two series in capped tenders

By Susanna Moon

Chicago, Sept. 18 – Land Securities Group plc, or Landsec, said wholly owned subsidiary Land Securities plc will accept tenders for £502,295,000 of its 5.376% class A6 notes due September 2029 and 5.125% class A11 notes due February 2036.

As announced Sept. 6, the company was holding separate tender offers for three tranches of its bonds with a maximum acceptance amount of £450 million.

Land Securities decided to accept all of the tendered class A6 notes and class A11 notes for a total cash cost of £673 million and none of the 5.396% class A7 notes due July 2032, according to a company update on Monday.

The breakdown for the tendered amounts is as follows with pricing set at 6 a.m. ET on Sept. 15 using a reference security plus a fixed spread:

• £219.48 million of the £316,878,000 of 5.376% class A6 notes with step-up date of Sept. 30, 2027 with pricing set at 131.317 using the 4.25% U.K. Treasury notes due December 2027 plus 63 basis points for a purchase yield of 1.925%; and

• £282,815,000 of the £500 million 5.125% class A11 notes with step-up date of Feb. 7, 2034 with pricing set at 136.226 using the 4.5% U.K. Treasury notes due September 2034 plus 70 bps for a purchase yield of 2.43%.

The company also was tendering for the £319,632,000 of 5.396% class A7 notes with step-up date of July 31, 2030, but none of those notes will be purchased in the offer.

The tender offers ended at 11 a.m. ET on Sept. 14.

Settlement is expected to occur on Sept. 22.

In addition, Land Securities Capital Markets plc will issue £500 million of 2.625% bonds with an expected maturity of 20 years and £500 million of 2.75% bonds with an expected maturity of 40 years, according to the company notice.

Based upon Landsec's reported debt position and valuation as of March 31, the pro forma impact of the tender offers and new issue is as follows, the release said:

• The group's weighted average maturity of debt will be extended by 5.2 years;

• The group LTV increases by 1.2 percentage points;

• Adjusted diluted net assets will be about £171 million lower; and

• The annual net interest saving on the tendered bonds, considering the cost of the new issue, will be about £8.4 million, and the annual cost of terming out about £325 million of short-term debt will be about £6.3 million.

BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com) and Citigroup Global Markets Ltd. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com) are acting as dealer managers, and Lucid Issuer Services Ltd. (+44 20 7704 0880; attn.: Thomas Choquet/Arlind Bytyqi; landsecurities@lucid-is.com) is acting as tender agent.

Land Securities is a commercial property company based in London.

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