Intu Properties has sourced a £488 million (€536 million) loan to refinance the Merry Hill shopping centre in Dudley, which is claimed to be the seventh largest mall in the UK.
The seven-year senior debt facility was provided by Wells Fargo, BNP Paribas, DekaBank and AXA Investment Managers – Real Assets, Real Estate Capital understands.
The facility reflects a loan-to-value ratio of around 53 percent based on the most recent market valuation of the shopping centre, which stood at £917.3 million as of 30 June 2017.
The loan is secured by the Intu Merry Hill shopping centre as well as the surrounding office, retail, and leisure elements, in total an estate encompassing 2 million square feet.
The shopping centre, which is located 10 miles east of Birmingham, comprises 212 stores, rented to tenants including Debenhams, Marks & Spencer, Next, Asda, Primark and H&M.
The property provides a nominal equivalent yield of 4.9 percent and has 92 percent occupancy rate. Its latest annual income stood at £40.5 million.
The new debt facility replaces a £500 million loan provided by Deutsche Bank and HSBC, which was used to finance Intu Properties’ acquisition of the remaining 50 percent stake of the shopping centre in June 2016.
The previous facility was due to mature in early 2018 and was written at an all-in cost of about 3 percent, Real Estate Capital reported at the time. The facility represented a 61 percent LTV ratio covenant.
“We made our first loan to this business in 1996 and this loan demonstrates the value of long-term relationship banking,” said Max Sinclair, head of the UK commercial real estate division at Wells Fargo.