Vesteda significantly transformed its funding profile from primarily CMBS notes and bank facilities based funding to a well-diversified fully unsecured funding structure, consisting of a combination of bank debt, euro commercial paper ('ECP'), private placements and public bonds. The unsecured debt profile allows Vesteda to secure debt funding through various debt markets at any point in time. Vesteda has a credit rating of 'BBB+' with a stable outlook from Standard & Poor's, and this was last reconfirmed in May 2019.
We will continue with our existing funding strategy. Our financing strategy is based on seven funding targets:
Leverage of ≤ 30%
Total fixed-rate and hedged floating rate exposure of ≥ 70%
Weighted average maturity of > four years
Diversified funding profile, with at least three funding sources of at least 10% individually
Sufficient liquidity headroom to refinance short-term debt (including maturing bonds and private placements), finance committed pipeline, and to accommodate redemption requests (Redemption Available Cash) according to the terms and conditions.
Well-balanced maturity calendar with < 35% maturing in a single year
Asset encumbrance of < 15%
At year-end 2019, we met all our funding targets.
In 2019, Vesteda further improved its funding profile through a combination of the following actions:
For its short-term funding needs, Vesteda introduced the Euro Commercial Paper programme for up to €1 billion. Using this programme, Vesteda can fund itself at a negative rate. At year-end 2019, Vesteda used €215 million of this programme.
In February 2019, Vesteda exercised the first extension option of the RCF. Five out of six lenders in the RCF approved this request. As a result, €630 million of €700 million was extended by one year to 1 June 2024, and €70 million matures on 1 June 2023.
Following the introduction of the Euro Commercial Paper programme, the RCF now serves only as back-stop facility, in the event that Vesteda cannot make use of the ECP market. Therefore, the RCF was not in use at year-end, and had an availability of €700 million. Vesteda also amended the RCF, incorporating a swingline loan. This allows Vesteda to draw up to €225 million on the facility on the basis of same day notice.
In May 2019, Vesteda issued its inaugural green bond. Vesteda’s focus on CSSR puts the company in a good position to issue 'green bonds'. A green bond not only underpins our CSSR strategy but also attracts a wider investor community, both in terms of types of investor and geography. This was also evidenced by the result of the green bond issue, when compared with the previous issue, more investors subscribed, and more sizeable orders were placed. The issue was more than six-times oversubscribed and the new-issue premium was negative.
In June 2019, Vesteda replaced the €200 million committed SMBC facility with a €200 million uncommitted SMBC facility. After the green bond issue and the repayment of our €300 million bond that matured in 2019, Vesteda did not need an extra €200 million committed facility for liquidity headroom. This is why we replaced this with an uncommitted facility.
Through these transactions, Vesteda increased its average weighted maturity profile to 5.9 years, above our long-term minimum target of four years. The average total debt interest rate improved to 2.0% in 2019.
Vesteda's main financial covenants, as part of its financing agreements, are a maximum loan-to-value ratio of 50% and a minimum interest cover ratio of 2.0. We comfortably met all the financial covenants of our financing arrangements in 2019.
The loan-to-value ratio was 23.1% at year-end 2019, compared to 24.0% at year-end 2018.
Debt portfolio at year-end 2019
Committed Debt instrument
EMTN PP 1.93%
EMTN PP 2.50%
Pricoa USPP 3.18%
Pricoa USPP 1.8%
Green Bond 1.50%
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Uncommitted Debt instrument
SMBC Uncommitted Facility
Euro Commercial Paper programme
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