Helaba backs Tritax Big Box as REIT expands finance pool

Tritax Big Box REIT has financed its latest acquisition with Helaba, the third with the German bank.

Helaba provided a £50.9m, five-year senior loan for logistics specialist’s purchase and development of a distribution warehouse in Erith, south east London, which is pre-let to online grocery distributer Ocado.

The facility has a loan-to-value of 50% of the purchase price and a blended margin of 170bps above three-month LIBOR. It is structured as a 12-month development loan, which will then convert into an investment loan on completion in the summer of 2016.

Tritax has expanded its pool of senior debt lenders to three banks after initially using only Barclays to fund its acquisitions and developments.

Santander was brought in last December with a £5.5m facility on a warehouse in Ripon, North Yorkshire, while Helaba previously backed Tritax’s purchase last November of two warehouses, one near Nottingham city and the other in Lancashire, with £7m and £11.6m loans respectively.

“It’s about relationships obviously and an element of trust in working with the banks,” said Colin Godfrey, partner and fund manager at Tritax. “You need banks that understand your business and your needs and particularly understand the real estate market and this case, big box logistics assets.”

Godrey said speed and certainty of execution were also important: “That’s one of the reasons the majority of our loans in our portfolio have been with Barclays. We worked out a financing agreement with them early on so we were able to roll out quite quickly on repeat loans on new assets coming in.

“That helped us move quickly and be competitive against other prospective purchasers and give confidence to vendors that we’d be able to raise the debt.”

Tritax typically gears in the 40-45% range and most of its loans have margins around 2%.

For quality propositions, margins have reduced to 1.5% and in some circumstances, even tighter than that, but those are on best-in-class propositions.

“Margins have reduced quite significantly as have bank arrangement fees. It wasn’t that long ago when arrangement fees were well over 1%. For a quality proposition, they’re now significantly below that,” he said.