Shaftesbury, the West End-focussed REIT, has refinanced a maturing Nationwide revolving credit facility (RCF) with a £130m 15-year term loan with Aviva Commercial Finance.
Aviva’s senior loan is priced at a fixed interest rate of 3.2% throughout the term and is repayable in full at maturity in March 2030. The current yield on the 15 year UK Gilt Index is 2.0%, which implies the margin is approximately 120 basis points.
This is the first of two Nationwide refinancings for Shaftesbury trailed by CoStar News back in November.
The cancellation of the existing £100m Nationwide RCF, due to mature in September 2016, has cost Shaftesbury £28.1m in swap breakage costs for the termination of a £70m interest rate swap.
This is equivalent to a reduction in EPRA net asset value (NAV) per share of around 10p, equivalent to 1.4% of EPRA NAV at 30 September 2014 (£7.13).
On a pro-forma basis, Shaftesbury stated in its announcement this morning that transactions will increase the weighted average maturity of the group’s debt from 6.7 years to 8.7 years and reduce the weighted average cost of debt by around 25 basis points.
In addition, Shaftesbury has also begun the refinancing of a separate £50m Nationwide facility, also due to mature in 2016.
Chris Ward, finance director at Shaftesbury, said: “We are pleased to have secured this financing during a period of extremely low gilt yields, and with a lender of the calibre of Aviva. Long-term funding is a natural fit with our business model and portfolio of good quality assets with secure income streams.”
Barry Fowler, managing director or Aviva Commercial Finance, said “We’re delighted to further strengthen our relationship with Shaftesbury, which has a great pedigree and proven track record managing these iconic assets in Carnaby Street.
“This provides Aviva Commercial Finance with an attractive loan asset and further highlights our ability to offer bilateral facilities of scale.”
In April 2014, Shaftesbury refinanced two £225m Lloyds Banking Group facilities: replacing a £125m bank facility with a £150m revolving credit facility with Lloyds; and a £134.75m 15-year fixed interest loan with Canada Life Investments at an all-in cost of 4.47% over the UK Gilt 2028 benchmark.
As part of the refinancing, Shaftesbury cancelled £110m in interest rate swaps at a cost of £29.0m.