Lloyds and Citi syndicate Peel’s MediaCityUK £325m loan to AIG and ING

Lloyds Bank and Citi have syndicated the majority of the £325m five-year senior loan secured by Peel Group’s MediaCityUK, the home of the BBC’s Northern headquarters, to AIG and ING Real Estate Finance, CoStar News understands.

LBG logo for webLloyds refinanced the maturing two-year £350m investment facility extended to Peel Holdings in 2011, which had paid down by £25m, and invited Citi into the deal to share the underwriting risk on the fresh £325m five-year senior loan.

CoStar News understands that the fresh senior loan was priced around 350 basis points over three-month LIBOR, reflecting the current occpancy level across the refinanced part of the estate.

Citi and Lloyds co-ordinated the syndication strategy selling around £125m to £140m to AIG, the US insurance lender, with a further circa £75m to £80m sold down to ING Real Estate Bank in London, which also acted as joint lead arranger.

Around £25m was retained by both Citi and Lloyds, although the UK clearing bank is contemplating an additional small sell-down.

The refinancing and deep syndication crystallises a substantial divestment of the Lloyds’ long-standing financing commitment to Peel Holdings’ Salford Quays scheme, which dates back to legacy HBOS development financing for the partially pre-let, partially speculative scheme back in July 2006.

Through its inherited HBOS commitments, Lloyds has sustained its support to Peel Holdings through the financial crisis, and recent turbulent property cycle, enabling the Manchester-based developer to build a world-class international hub for the creative and digital sectors, which is home to more than 50 businesses including the BBC, ITV, Coronation Street and the University of Salford.

For Lloyds, the syndication reflects the bank’s strategy of leading financing transactions and seeking to drive its return on capital through distributing in syndication markets.

The financing and syndication was co-ordinated by John Feeney, global head of corporate real estate at Lloyds Bank and Wes Barnes, head of European real estate at Citi.

Peel Holdings’ MediaCityUK, which is home to 26 BBC departments including BBC Breakfast, BBC Sport, BBC Radio 5 live, has stabilising occupancy rates thought to be near 80%.

Over the coming 12 months to 18 months, as Peel Holdings completes the leasing-up of the Manchester waterfront scheme and MediaCityUK moves from a stabilising to stabilised asset, more competitive lending terms could be achieved with the next refinanced loan a realistic candidate for a future CMBS transaction.

All parties declined to comment on the syndication.

However, in a prepared statement issued yesterday, Stephen Wild, managing director, MediaCityUK, said: “We are delighted to have secured this arrangement with Lloyds Bank, Citi and ING for the next five years.

“An agreement of such calibre underpins the national significance of MediaCityUK and supports The Peel Group in striving to achieve our long-term ambitions.”

Lloyds’ Feeney said: “MediaCityUK is yet another example of Peel Group’s transformational activities and long-term, ambitious vision. We are delighted to have successfully closed this landmark transaction supporting a valued client.”

Citi’s Barnes said: “We enjoyed the opportunity of working with the Peel Group and Lloyds Bank Commercial Banking to provide a long term financing facility, which supports the Peel Group’s continued development of MediaCityUK into a world class media hub.”

Linklaters LLP acted on behalf of the underwriters; Addleshaw Goddard LLP advised the Peel Group.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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