Citi builds a real estate hybrid

Citi has structured a ground-breaking hybrid equity issue for property group Goodman. The $400 million issue means Goodman is the first property group or REIT (real estate investment trust) in the world to receive equity credit from ratings agencies Standard & Poor's and Moody's for a hybrid issue.

The ratings agencies made a decision early last year to award equity credit to hybrid securities for some industrials, provoking a stampede of issues from the likes of Orica, Fairfax and Woolworths, and a doubling of issues to around $7.5 billion.

The benefit for the likes of Goodman is that it allows it to raise funds for expansion without having to issue ordinary equity and diluting shareholders' stakes, or sell assets.

Simon Ransom, the head of Citi's real estate investment banking team, who has advised Greg Goodman over many years, and Fraser Todd, Citi's head of hybrid products, ran the issue.

Citi was structurer and transaction co-ordinator, and was joint lead manager and joint bookrunner with Macquarie Equity Capital Markets Limited. ANZ Securities, Citi Smith Barney and Macquarie Equities Limited have roles as senior co-managers.