In the challenging financial times currently experienced on a global scale, any business able to sustain and grow its value is commended. Businesses that exhibit a resilient and conservative platform tend to be successful. Grand City Properties is an example of such a case, having their success reflected by a strong credit rating of BBB+ from S&P. The company’s strong focus on a healthy balance sheet, strong KPIs, conservative financial policy, and high coverage ratios has helped keep its business resilient in 2020, and its portfolio strong in the face of a challenging year.
Grand City Properties is a specialty company operating as a leading residential real estate owner in densely populated cities, primarily in Germany and London. Grand City Properties (symbol: GYC) activity was founded in 2004 by the investor Yakir Gabay (יקיר גבאי) and is currently traded on the Prime Standard of the Frankfurt Stock Exchange. The company has utilized a strategy of improving its owned properties by reconfiguring and maintaining strong tenant management, as well as the generation value by improving rental levels and property occupancy.
Grand City Properties stable residential portfolio supports its’ BBB+ high rating. Most notable by S&P is the stability and resilience of Germany’s highly regulated residential real estate market, even in the face of the COVID-19 pandemic. S&P also views the company’s strong portfolio that includes many residential assets not only across metropolitan German locations but also its London based properties.
Grand City Properties maintains a solid capital structure, high liquidity, moderate leverage, and lacks any significant debt that is to mature before 2024, along with a low-cost debt percentage (about 1.3%), proportion of its unencumbered assets is high at 79% (worth of roughly €6.7 billion) of the portfolio value. Along with a Baa1 resting on Moody’s, GCP also enjoys well-diversified funding sources, straight and convertible bonds, mortgage debt, common equity, and perpetual notes.
The strong Moody’s and S&P ratings have uniquely positioned Grand City Properties to retain the ability to access capital market funds, reflected in the strong demand for the company’s perpetual notes issuance. GCP has issued €700 million perpetual notes at a low 1.5% coupon. The order books subsequently became oversubscribed 5 times over. GCP achieved the lowest coupon ever issued in perpetual notes by any European real estate company.
Grand City Properties’ largest shareholder is Aroundtown SA which owns 40% of the company.
AroundTown is Germany’s largest commercial real estate company and its largest shareholders are Avisco (controlled by Yakir Gabay יקיר גבאי), Blackrock, Norges, Vanguard and many other leading institutional investors.