Shaftesbury, the specialist West End REIT, has secured a £134.75m 15-year term fixed rate senior loan with Canada Life Investments, taking advantage of the low cost of debt for long duration lending.
The 50% LTV Canada Life fixed rate senior loan, secured by a representative circa £269.5m-valued pool of granular shops, residential and office properties throughout Shaftesbury’s West End property portfolio, was priced all-in at sub 5%, CoStar News understands, and is repayable in May 2029.
The new 15-year senior loan replaces an existing – and almost fully drawn – £100m revolving credit facility (RCF ) with Bank of Scotland (BoS), which had a margin of 100 basis points.
Shaftesbury’s legacy BoS RCF included a series of mismatched interest rate swaps, with durations varying between 2028 and 2038. The cost of terminating those swap arrangements amounted to £29.0m, equivalent to 10p per share.
The balance of proceeds from the Canada Life loan, net of arrangement costs, will be used to repay existing indebtedness drawn under other revolving credit facilities.
In addition, Shaftesbury has increased a separate RCF with Lloyds Bank, from £125m to £150m, replacing an additional short-term £30m credit facility with the same bank which was entered into in February.
As a result of these refinancings, Shaftesbury has unused debt facilities of around £160m and a weighted average debt maturity of 7.6 years.
Christopher Ward, finance director at Shaftesbury, said: “We are delighted to have entered into this long-term relationship with Canada Life Investments, a new lender to the group, as well as completing the restructuring of our arrangements with Lloyds Banking Group.
The quality of our assets and the security of their income streams continue to prove attractive to existing and potential new lenders.”
In January 20120, Shaftesbury’s 50-50 joint venture fund with The Mercers’ Company, Longmartin Properties, secured a 15-year £120m facility with Aviva Commercial Finance at a fixed rate of interest of 4.43%.