Lloyds Bank and Citigroup refi MediaCityUK and start syndication sell-down

Lloyds Bank and Citigroup have refinanced MediaCityUK scheme at Salford Quays in Manchester with a £277m senior loan, following the injection of new equity by Legal & General Capital (LGC) which has reduced the loan-to-value and recalibrated to current tighter credit spreads.

LGC paid Peel Holdings £251.5m for a 50% in the 37-acre media hub – announced last week during MIPIM – which triggered the much lower leverage refinancing.

The new five-year £277m senior, split 50: 50 between Lloyds Bank and Citigroup, reflects a 55% LTV.  The margin is thought to be in the low 200s.  MediaCityUK, the home of the BBC’s Northern headquarters, was valued at £503m in tandem with LGC’s 50% stake purchase.

Back in December 2013, Lloyds Bank and Citigroup refinanced MediaCityUK with a £325m senior loan which reflected approximately a 75% LTV, implying a circa £433m valuation, and a senior margin of around 350 basis points.

The new facility reflects a substantial de-risking for creditors: a 20 percentage points reduction in the LTV, which has aligned with an almost £70m increase in the MediaCityUK valuation as well as an uptick in the scheme’s occupancy level from 80% 15 months ago.

Lloyds Bank and Citi are expected to co-ordinate the syndication of around two-thirds of the new loan, approximately £182m.  Last time, AIG took near to £140m of the £325m deal.  However, the insurance lenders not expected to be interested in the new deal given that the margin is substantially below its 300 bps threshold.

ING Real Estate Bank last time took up to £80m.

Manchester’s MediaCityUK, the largest purpose-built creative, digital and technology community in Europe, which is home to more than 200 businesses including the BBC, ITV, Coronation Street and the University of Salford.

John Feeney, managing director, global head of commercial real estate at Lloyds Bank Commercial Banking, said: “This transformational scheme is energising Salford Quays and the wider Greater Manchester and North West economies.”

Wes Barnes, head of European real estate at Citigroup Global Markets, added: “We are proud to be supporting Peel and LGC in what is an exciting regeneration scheme that is already firmly established as a thriving media and creative hub.”

Paul Stanworth, Managing Director of Legal & General Capital, described the acquisition in MediaCityUK is “a significant step forward in our direct investment into major UK infrastructure and real estate assets”.

He added: “In The Peel Group, whose vision has been instrumental in the development of the North West, we couldn’t have a better partner for the stewardship of MediaCityUK.

“We know the North West well and are already involved in regenerating Salford. Now, with our investment in MediaCityUK, the potential to drive growth and prosperity for the area is immense. Media and internet technologies are the new industrial revolution and Greater Manchester is at the heart of it.”

LGC plans to work with The Peel Group on strategically developing MediaCityUK and the wider Salford area, with the aim of creating the Media Canary Wharf of the North.

LGC has acquired a 50% interest in the corporate holding vehicles, Peel Holdings (media) Ltd and Peel Media Ltd. LGC was advised by Legal & General Property (LGP). Peel will retain responsibility for both the asset management of the estate and the development management of future plots.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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