ORLANDO-CNL Lifestyle Properties, a $2.7 billion REIT focused on lifestyle properties, has closed on a $400 million bond offering to qualified institutional buyers. The 7.25% unsecured senior notes, which were issued at 99.249% of par and a 7.375% yield to maturity, are due in April 2019. The bonds provide attractive debt financing for the REIT, and were rated BB- by Standard & Poor’s and Ba3 by Moody’s.
“This validates our investment thesis, which was a great affirmation to us,” Byron Carlock, president and CEO of CNL Lifestyle Properties, tells GlobeSt.com. “It also validates the ability for a non-traded REIT to access the corporate credit markets, which we see as an important part of our company’s maturation. And it allows us to show continued access to capital even at a time when we are shutting down equity subscriptions to the REITs.”
CNL Lifestyle’s investment thesis is focused on properties that stand to benefit from the lifestyle choices of baby boomers, their children and grandchildren. The REIT is one of the largest owners of ski resorts, golf courses, gated attractions and marinas in the country. The offering drew 30 institutional buyers. CNL Lifestyle Properties will complete its current equity offering and close to new investors April 9, 2011.
“We chose two very capable underwriters in Bank of America/Merrill Lynch and Jefferies,” Byron says. “We watched the High-Yield Index and chose what we thought was a good time in the market, and then we hit a six-day, eight-city road show and filled subscriptions with 60 presentations.”
Compared to a secured loan process that can take anywhere from 60 days to six months and includes surveys, environmental and mechanical reports, and appraisals, the corporate unsecured market emerged as an efficient way for a borrower of CNL Lifestyle’s size in the marketplace.
“Now that we have closed our equity subscriptions and closed this bond offering, we will take these proceeds and begin systematically continuing our equity strategy into a into a pipeline of deals that we’re evaluating currently,” Carlock says. “We are in registration for another fund, and that will be hopefully cleared in the next few weeks if all goes well.”
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