CPI BYTY, the second largest owner and manager of housing in the Czech Republic, issued project bonds with a total volume of CZK 3 billion. The total realisation of the emission and purchase of the bonds was carried out by Raiffeisenbank. The bond programme is in four emissions with an attractive profit, variable maturity and real estate as collateral. The first bond project on the Czech market was issued on the newly purchased portfolio of supermarkets in the autumn of last year by the sister company CPI Alfa, a.s. The manager and arranger of the emission was Raiffeisenbank, which managed to sell the entire emission within a few hours. “The success of the pilot emission of project bonds, with the very good and professional cooperation of our long-term business partner Raiffeisenbank, encouraged us to issue additional project bonds, again with the assistance of Raiffeisenbank.“ said Jiří Dedera, CPI Group Investment Director. “Raiffeisenbank is a traditional business partner in the financing of real estate projects. We are happy to offer another alternative to classic bank loans to our clients from the development and real estate investment fields. In these times of insecure economic development, many companies tend to postpone getting bank loans. We, however, are capable of ensuring and finding different ways of financing.” added Marek Tichý, Corporate Finance Director of Raffeisenbank. CPI BYTY Bonds Within the scope of the bond programme, with the total volume of CZK 3 billion, investors can choose from four emissions which differ according to the length of maturity and interest. The length of bond maturity ranges from 2 to 8 years, with a fixed coupon from 2.5% to 5.8% and an annual payout. Face value of the bond is 1,000 CZK. In particular Emissions with maturities no longer than two years and a coupon of 2.5% Emissions with maturities no longer than four years and a coupon of 3.5% Emissions with maturities no longer than six years and a coupon of 4.8% Emissions with maturities no longer than eight years and a coupon of 5.8% “Securities within the frame of this bond programme will be offered by Raiffeisenbank primarily to its clients from both the private bank Friedrich Wilhelm Raiffeisen and to institutional clients. According to our previous experience with similar emissions, and with regard to the current market interest rates, we believe that this will be of great interest to our clients. This type of investment is suitable for clients seeking diversification of their investments and who also want to find an alternative to standard saving accounts or investment products.” added Marek Tichý from Raiffeisenbank. Bond Assurance The greatest advantages are mainly in the assurance of securities, with CPI BYTY guaranteeing the issued bonds with their assets, which are worth CZK 6 billion. This is twice as much as the total value of the emission. “This is a stable income portfolio of rental flats in the Czech Republic, with long-term growth.” added Jiří Dedera. Apart from real estate as a guarantee of CPI BYTY shares, financial covenants and vinculation insurance are additional guarantees. In addition, the bank maintains a posture of so-called "Agent for collateral", which means that in the case of CPI BYTY not meeting its commitments, the bank exercises the power of chattel mortgage and will sell the real estate in order to ensure bond redemption. Hereby the rights of creditors are represented. Furthermore, the bonds will be listed on the Prague Stock Exchange. Real Estate Portfolio – Guarantee Its real estate portfolio, which undertakes the function of a pledge bond, consists of houses and flats for rent in 14 regions across the Czech Republic. CPI BYTY has long been the second-biggest manager of rental housing and has proven its successful business model in economic indexes. Its real estate portfolio, with a total of 12,600 flats, creates a fixed and stable cash flow. In 2012, the company reached the net asset value of CZK 8.6 billion and reached CZK 390 million in net profit. Its positive balance, in comparison with released and rented flats, shows a constantly growing value of the portfolio. This is multiplied by the significant process of revitalising its housing stock, which began in 2010. The combination of these activities, including its further development of services, contributes to the growing interest in their rental flats. “Investors who buy bonds from CPI BYTY basically become lessors of the flats and can profit from their well-established and time-proven business model. As an experienced manager of rental housing, we are offering our clients a return on their investment without the necessity of joining the process of managing and renting the houses.“ said Dedera on the idea of emission. CPI BYTY bought its first housing complex in Prague from AVIA Letnany at the end of the 1990s. This was followed by the purchase of houses in Usti nad Labem, Ceska Lipa and southern Moravia. The portfolio of rental flats is one of the supporting and stabilizing elements of CPI Group’s entire real estate holdings. In addition, the advent of rent deregulation on 31 December 2012, added to the annual growth of profits from rent. Reasons for emission CPI Group’s key to success is the diversification of its portfolio and activities which enable it to eliminate market fluctuations and economic changes. The same role is played by bonds, which serve as an alternate source of funding. “Bonds represent one of the alternative forms of funding. They are used to supplement our own resources and bank loans. Concerning CPI BYTY, bonds substitute current bank loans from Raiffeisenbank and loosen bank credit limits. We will invest the obtained funds for the development of our own properties.” commented Dedera about making use of the obtained resources. He also mentioned that he would not object to any further, or new forms, of partnerships concerning investments in the future.
