British Land has secured a fresh £785m five-year revolving credit facility (RCF) with a syndicate of 14 banks, in the largest unsecured facility raised in more than six years.
The UK’s second-largest REIT has negotiated a headline margin of 115 basis points over three-month LIBOR for the first third of the total RCF, or circa £260m, with margin step-up of sub 20 basis points for the second and third increments when drawdown. The terms include British Land’s standard unsecured financial covenants.
Commitments from the 14 banks range from £25m to £100m, with British Land’s four joint co-ordinators and bookrunners – Lloyds Bank, Sumitomo Mitsui Banking Corporation, Santander Global Banking & Markets and The Bank of Tokyo-Mitsubishi UFJ – all signing up for around £100m or near.
The remaining 10 banks offered a range of commitments, predominantly in the £25m to £50m range, with the lenders comprising: Barclays Bank, Bank of China’s London Branch, HSBC Bank, JPMorgan Chase Bank, Landesbank Hessen-Thüringen Girozentrale (Helaba), Royal Bank of Canada, Wells Fargo, BNP Paribas, Crédit Agricole CIB and The Royal Bank of Scotland.
Sumitomo Mitsui Banking Corporation, Royal Bank of Canada, Wells Fargo and BNP Paribas are new or re-established unsecured lending relationships for British Land. Lloyds is also the facility agent.
British Land has negotiated a five year RCF, with a two-year extension option to a full term of seven years with each bank’s approval. British Land’s ability to secure even tighter margins for its RCF than where current pricing is reflects the broader relationships that the largest-listed property companies have with their banking partners.
Large REITs, property companies and funds historically often able to negotiate preferential margin terms in exchange for banks’ securing a slice of profitable ancillary banking mandates, such as interest rate and currency swaps, corporate bond agency mandates, money transmission, advisory services and foreign exchange. However, British Land is not thought to have agreed direct ancillary business in connection with the new RCF’s commitments.
British Land has also closed and drawn its £200m US Private Placement, signed in August 2013.
The two Sterling fixed rate notes with 12-year maturity were provided by New York Life and Pricoa Capital Group, and swapped to an effective floating rate of 103 bps above LIBOR.
The terms of this transaction included agreed deferred drawdown, enabling British Land to continue to utilise lower margin bank facilities arranged in earlier years.
Lucinda Bell, finance director at British Land, said: “We are very pleased with the level of support for this new Revolving Credit Facility. Over the last 12 months we have raised £1.5bn of debt finance on competitive terms from a broad range of sources. By taking advantage of current market conditions, this Facility adds further flexibility and term to our already strong and well diversified debt portfolio.”
Last May, British Land secured a £310m unsecured RCF from initially a consortium of seven international banks, with a headline margin for the first third of debt capital at 135 bps.