Loan re-financing completed Canada Life

RNS Number : 4597C

Schroder Real Estate Inv Trst Ld

16 April 2013

 



Schroder Real Estate Investment Trust Limited

(the 'Company' / 'Group')

Loan re-financing COMPLETED with Canada Life Investments ('Canada Life')

Following the announcement on 15 March 2013, Schroder Real Estate Investment Trust Limited announces that it has now completed a new £129.58 million loan facility with Canada Life to refinance its £114.5 million securitised loan in full.  The final key loan terms are:

·      Initial loan to value ('LTV'), ignoring cash held outside Canada Life's security, of 50%, calculated with reference to an independent valuation as at 15 January 2013

·      Total fixed interest rate of 4.77%, equating to an annual interest cost of approximately £6.18 million.  This compares to an interest rate under the previous securitised loan of 5.72% or an annual interest cost of £6.55 million.  The new loan should also realise a reduction in loan servicer fees of approximately £0.4 million per annum

·      80% of the loan maturing in 15 years and 20% maturing in 10 years

·      No amortisation

·      LTV covenant of 65% and an interest cover ratio ('ICR') covenant of 185%

·      Flexibility to sell existing properties and acquire new properties

·      Flexibility to asset manage the portfolio including the ability to utilise cash from disposals to fund capital expenditure

·      Flexibility to make a limited number of voluntary prepayments.  Fixed rate break costs are payable on any prepayment 

Refinancing the securitised loan that matured in July 2014 has been a major strategic objective for the Company and the new facility satisfies the key criteria of achieving a long-term debt maturity, a reduction in the cost of debt and sufficient operational flexibility to permit continued active management of the portfolio. 

As a condition of the refinancing the Company has broken its remaining interest rate swaps related to the securitised loan.  This has crystallised a total swap break cost of £15.1 million which compared to the negative mark to market value in the Company's last reported Net Asset Value ('NAV') as at 31 December 2012 of £19.1 million.  As the Canada Life loan benefits from a fixed rate there will no requirement for the Company to reflect a mark to market value of interest rate swaps in its NAV.

Having paid swap break costs and total re-finance fees estimated at £2.1 million, including an arrangement fee of approximately £1 million, the Company has cash outside Canada Life's security of £27.5 million.  This results in a net loan to value, assuming the portfolio valuation as at 15 January 2013, of approximately 39%. 

The successful refinancing of the loan will allow the Board, in turn, to consider the longer term sustainability of the dividend. The terms of the new loan will be taken into account alongside other factors, including the recent planning refusal at Reynards Trading Estate in Brentford. The Board will update shareholders in due course.

For further information:

Schroder Property Investment Management Limited: Duncan Owen / Nick Montgomery	020 7658 6000
Northern Trust: David Sauvarin	01481 745529
FTI Consulting: Dido Laurimore / Daniel O'Donnell	020 7831 3113

 

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