SUM - Summerset Group

[Vaygor1]

https://www.nzx.com/announcements/323212

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

[Ggcc]

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

It was mentioned by an institution some time back and they also mentioned the bond offer would be backed by them. I can’t remember which one. They need to grow fast to meet demand. I support it and i knew it would be coming

[Beagle]

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

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.

[LAC]

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...

[Ggcc]

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

[winner69]

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

Mind you RYM has increased debt from $0.3 billion to $1.0 billion last 4 years

Obviously prefer dealing with bankers etc or bankers are more flexible with them.

[winner69]

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?

[Beagle]

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)

[Lewylewylewy]

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.

[winner69]

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)

If they draw down the remaining $200m and bonds are $100m leverage will be around 40% at the end of this year