Great Portland strikes with convertible bond Great Portland Estates has underscored the strength of demand for London property by issuing one of the lowest-paying convertible bond in UK history. On Tuesday, the group, which specialises in developing and owning real estate in London's West End, announced the final terms of £150m-worth of five-year unsecured convertible loan notes, and said the annual interest payment, or coupon, for holders would be 1 per cent. This compares with an average coupon of about 5 per cent for bonds issued by property European property companies last year. Great Portland set the initial conversion price - at which the bonds may be converted into equities - at £7.145 per share, representing a premium of 35 per cent to the average market price of its shares during the bookbuilding. These bond terms highlight a remarkable turnround in fortunes for property companies, which, two years ago, were written off by many as being too high risk and with little or no access to the debt capital markets. In the past year, however, issuance by landlords and developers has rocketed across Europe, with almost €20bn of bonds being launched last year - more than double 2011"s €8.3bn, according to data from DTZ, the property group. Nick Sanderson, Great Portland's finance director, said the low cost of its new debt reflected the company's focus on central London assets and its development pipeline - which includes a City of London skyscraper and a range of office, residential and retail projects in the West End. Great Portland has been among the UK's best performing property businesses during the financial crisis, securing a number of high profile projects, such as the Hanover Estate near Oxford Street. However, analysts have noted that another reason why property companies and housebuilders have turned to the capital markets has been a shortage of bank finance. Since the start of the financial crisis, Europe's banks have slowed - and, in some cases stopped - providing debt secured against real estate. This slowdown has been exacerbated by the impending implementation of Basel III - the third accord in a sequential improvement of global banking regulation, which will increase the amount of capital lenders have to hold against property loans. As well as increasingly depending on the capital markets, property companies have also turned to alternative sources of debt finance, such as insurers, pension funds and private equity groups - many of which have recently entered the real estate lending market for the first time. In a recent report, Morgan Stanley estimated that the so-called additional funding market for property could grow to €200bn over the next few years. JPMorgan, Royal Bank of Scotland, HSBC and Credit Suisse acted as joint bookrunners for Great Portland's convertible bond offering.