Urban Exposure (UEX:AIM) has announced that it will launch a 6.5% secured sterling bond, expiring in 2026. The company specialises in development finance loans to small and medium sized residential property developers with a proven track record.
The bond will be start trading on August 6 and will pay a fixed rate of interest of 6.5% per annum, paid semi-annually and available in an initial size of £2,000, then multiples of £100. The bond will be guaranteed by Urban Exposure.
TAPPING INTO UK HOUSING SHORTAGE
The company is hoping to tap into the expected demand for 300,000 new homes across the UK to keep pace with population growth as well a shortage of development finance.
It reckons that the demand from smaller housebuilders for finance outstrip supply due to the ‘dramatic reduction’ in traditional bank lending since 2007.
Although Urban Exposure is guaranteeing the bond, it will rely on covenants and first claim on the assets in the event of default, in order to pay back some of the loans.
Neither the bond nor the Urban Exposure holds a credit rating, and the product will not be protected under the FCA’s financial compensation scheme.