Unite's bond follows hot on the heels of similar property offerings by
Unite has already made strides towards diversifying its sources of funding, raising £121m in a landmark deal with the insurer
The bond comes with the same covenants as the other more recent issues. It is not secured on any property, but Unite has committed not to let its net LTV exceed 75 per cent or its interest-rate cover slip below 1.5 times.
A more unusual bond in the offing is to be launched by Alpha Plus Group, an unlisted for-profit schools provider backed by property veteran Sir John Ritblat. Alpha Plus wants to raise £50m from private investors to refinance a loan facility. It is expected to pay about 5.5 per cent, but - uniquely for a retail bond on ORB - it will be secured against six schools and one nursery, with about £84m of assets, mainly in property, between them.
We have long been bullish on Unite's shares, which have recovery value as the company improves its cash flow. The re-rating story does not apply to the bonds - but neither does the risk that investors suddenly take fright at Unite's debt levels, as they did last autumn. Backed by a fundamentally solid portfolio, this is another useful source of income from the burgeoning retail bond market.