Grainger cuts cost by 85bps with £150m loan

HSBC and Santander have provided a £150m, five-year facility to developer Grainger to refinance a portfolio of its residential developments.

The loan replaces an existing £120m facility from the two banks which was due to mature next year. The margin on the new facility is 170bps above three-month LIBOR, down from 255bps on the previous loan.

The portfolio comprises of 1200 units across eight residential blocks mainly in central London.

In a statement to the London Stock Exchange this morning, Grainger said the loan covenants remain unchanged and “the structure enables further pricing benefits to be gained at future lower levels of loan-to-value”.

The £150m loan represents 11% of total group facilities of £1.37bn and leaves Grainger with no significant loan maturities until 2020.

The facility follows Grainger’s £580m refinancing from a syndicate of five banks in August.

The Royal Bank of Scotland, HSBC, Barclays, Nationwide and Allied Irish Bank refinanced their own existing facility. The original facility also included Lloyds, which has dropped out of the latest deal.

That loan was also secured at a margin of 170bps above three-month LIBOR, a saving of 50bps.

Mark Greenwood, Grainger’s finance director, said at the time there was good competition from lenders to provide the loan.

The £580m refinancing is the company’s largest debt component.

Yesterday, Standard & Poor’s announced it had raised its issue rating on Grainger’s existing £275m senior secured notes, due 2020, to investment grade, ‘BBB-‘ from ‘BB+’. The re-rating was based on the improved valuation of the group’s assets.