Capital & Regional has refinanced the debt held against its UK shopping centre portfolio with three new loan facilities totalling £372.5 million (€438 million).
The UK REIT has agreed the financing of the five Mall shopping centres with TIAA, Wells Fargo and Royal Bank of Scotland (RBS) in a deal on which Rothschild advised the firm.
Through the refinancing, Capital & Regional has reduced its cost of debt to a blended fixed rate of 3.27 percent across the three facilities, down from 3.52 percent on its previous debt, following the sale of one of the Mall assets, The Mall, Camberley.
TIAA has provided a £165 million loan for a ten-year term with a one-year extension option. Wells Fargo has provided a £107.5 million facility for seven years, while RBS has provided a £100 million, five-year loan with two one-year extension options.
Capital & Regional has drawn down £90 million of the RBS facility, leaving the remainder available to fund capex and meaning that a total of £362.5 million of the finance has been drawn down.
The loan provided by Wells Fargo is secured on The Mall, Luton, while the other two facilities are secured on four shopping centres in Blackburn, Maidstone, Walthamstow and Wood Green in London.
In June 2014, Morgan Stanley provided a £375 million loan to The Mall Fund, which Capital & Regional at the time owned alongside Aviva Investors and Karoo. The loan, which included a £25 million capex facility, refinanced The Mall Funding CMBS, which was secured by the shopping centre portfolio. Capital & Regional bought out the fund’s joint owners during 2014 and the debt was restructured into a £380 million facility. The firm has since integrated the Mall properties into its portfolio.
The repayment of the existing £334.6 million debt, which was due to mature in May 2019, has triggered a redemption cost of £7.6 million on fixed rate debt of £233.3 million. A further non-cash charge of £3.4 million will also be recognised from the write-off of unamortised financing costs on the existing debt, resulting in a total charge of £11 million being recognised at the 2016 year-end, the company said.
“This refinancing achieves the objectives we set out at the time of our half year results announcement in August 2016,” commented Capital & Regional chief executive Hugh Scott-Barrett.
“It provides the group with the security of long term funding while also taking advantage of the historic low level of current interest rates. It also diversifies the sources and maturities of our debt, and increases the quantum to fund future capex efficiently at the asset level whilst maintaining significant flexibility for asset recycling,” Scott-Barrett added.