Why does Sum need more money? Have they over-committed?
RYM seem to grow at a manageable rate without issuing bonds.
Disc: Holding RYM an SUM
Printable View
Rob Campbell says they're diversifying their funding sources and lengthening their debt maturity profile. Another bond issue was clearly telegraphed at the annual meeting.
I know Julian is keen on expanding into Australia.
Fact is SUM is growing faster than RYM.
Long bonds currently offer very cheap financing for strong corporates.
I think this fuels more growth and I see it as a positive.
They need some cash when they hit the 600 build rate:)
Good move to get some cheap cash when you look at their growth rate. Just hope they can get the workforce required in future...
Tradies are stretched to the limit. I have local contractors booked up for 6 months minimum with more enquiries every day extending that timeframe. I have heard from one that he looked at his quotes and now throws an extra $1,500 on a week’s job just if people are in a hurry at no extra cost to him. I agree and hope Summerset don’t struggle with that
At rate SUM are going with this bond issue and if they use that touted $200 undrawn credit sooner than later they might need to go to shareholders for sum more capital
What’s a ‘healthy’ level of leverage in this sector?
40% ? I think their balance sheet is pretty conservative mate. Nothing worries me about this issue indeed I welcome it. If bondholders want to fund more growth for shareholders at around 4.0 - 4.50% per annum, I am very pleased. (NB 2023 bonds previously issued at 4.78% currently trade at 3.8% so I think the interest rate range I guessed will be where the new bonds are at for a 2025 maturity)
I was very happy to see the bond offer. Remember that debt = profit in real estate, and these guys get a good return on their debt. Also, bonds are a super cheap debt. Good stuff.
I imagine they'll issue more bonds in future, if the demand is there and the rates are still low.