Capital & Regional aims to refinance £380m of debt

Capital & Regional is reviewing options for refinancing £380 million of debt secured by The Mall shopping centre portfolio which is due to mature in 2019. The group is targeting a refinancing or restructuring this year.

In June 2014, Morgan Stanley provided a £375 million loan to The Mall Fund, which Capital & Regional 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 Group has begun to review options for the refinancing of the core £380 million debt facility, which comprises six wholly owned assets and matures in May 2019,” chief executive Hugh Scott-Barrett said today in Capital & Regional’s annual results. “It is likely that this facility will be either restructured or refinanced during the course of 2016.”

The Mall portfolio debt comprises a fixed-rate tranche of £233.3 million, priced at 1.86 percent plus applicable margin, and a floating rate tranche of £146.7 million.

Capital & Regional also announced a new revolving credit facility in today’s results. Last November, the firm opted for a new RCF of £30 million to replace an existing facility. The RCF is due in May 2019 and carries a margin of 3 percent.

“The restructuring of the group’s revolving credit facility has been an important step in ensuring that Capital & Regional has flexibility in the execution of tactical acquisitions as well as in the management of the capex programme,” said Scott-Barrett.

In January, Capital & Regional exchanged contracts with Standard Life Investments to buy the Marlowes shopping centre in Hemel Hempsted for £35.5 million. The deal was part-funded with a £17.8 million loan from Royal Bank of Scotland. The loan was extended by £5.25 million later in the month to fund the group’s purchase of the adjacent Edmonds Parade property for £10.5 million.