Casablanca, Asharq Al-Awsat—Morocco’s Addoha Property Group is planning to issue bonds worth 2 billion Moroccan dirhams (244 million US dollars) this week, in a bid to restructure existing debt.
Issued between July 23–25 the new restructured debt will be secured against a mortgage on a 355-hectare (3.5-million-square-meter) real estate property owned by the company north of Rabat, making the bonds the first of their kind issued by a Moroccan company.
The new eight-year bonds will be issued in four tranches, two with a 4.76-percent coupon rate and two set at 5.55 percent, with one of either pair to be traded over-the-counter and the other at the Casablanca Stock Exchange.
The original debt, issued in 2010 and set to mature in 2015, was set at 3.88 percent.
Priority for subscription will be given to investors in the original five-year bonds issued by the company. The opportunity will then be opened to new investors to buy any of the new debt once demand from the original investors has been met.
Following this development, the Group’s total debt will rise to 8.62 billion dirhams (1.05 billion dollars), representing 69.4 percent of its entire capital.
The move follows recent stagnation in the Moroccan real estate market.
Property investments by the group have declined 67 percent, with 700 million dirhams (85 million dollars) of new land purchased during 2013, in comparison to 2.1 billion dirhams (256 million dollars) in 2012. The group’s construction of residential apartments also declined last year by around 4 percent, while net profits dropped 6.5 percent.
The deflated market has led Addoha to focus its activity in the Casablanca and Rabat areas, which are currently enjoying high demand for property.
Last year, the group adopted a three-year plan limiting its investments to purchases of land in and around Casablanca and Rabat, and began measures to expand outside the Kingdom by acquiring property in West African countries.
In the last few months, the Group launched seven major projects to build 13,200 apartments in the Ivory Coast, Guinea, Cameroon, and the Congo. It also signed agreements to build 30,000 residential apartments in Niger, Senegal, Mali and Ghana.
The Group is also studying the viability of the Arab market, especially in the affordable housing segment, and aims to carry out a quarter of its overall business outside Morocco in coming years.