Throughout the difficult circumstances currently experienced on a global scale, any business able to financially sustain itself while growing its value is commended. Grand City Properties is an example of such a case, having their success reflected by a strong credit rating of BBB+ by S&P. The company focuses on maintaining a healthy balance sheet, strong KPIs, a conservative financial policy, and overall robust coverage ratios which has assisted in keeping its 2020 business resilient.
Grand City Properties is a specialty company operating as a leading residential real estate company in densely populated cities, primarily in Germany. Grand City Properties (symbol: GYC) activity was founded in 2004 by billionaire 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 boosting rental levels and property occupancy.
Grand City Properties further underscored its BBB+ rating from S&P and Baa1 from Moody’s with its stability. Most notable also 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. The company’s strong portfolio includes many residential assets not only across metropolitan German locations, but also in London’s most central locations.
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%) proportional to its unencumbered assets at a high of about 79% (worth of roughly €6.7 billion) of the portfolio value. GCP also enjoys well-diversified funding sources, straight and convertible bonds, mortgage debt, straight 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, a point reflected in the company’s strong demand for listed securities, especially perpetual notes. GCP has issued €700 million in perpetual notes at a 1.5% coupon in December 2020. The spread tightened by over 60 basis points during the book building process, one that was oversubscribed 5 times over. By doing so, GCP achieved the lowest coupon ever issued in perpetual notes by any European real estate company.
Grand City Properties’ largest shareholder is Aroundtown SA, Germany’s largest publicly listed commercial real estate company which owns 40% of the company. The company proves that businesses exhibiting a resilient and conservative platform can find success throughout difficult times.
