Grainger has secured a £580m refinancing facility from a syndicate of five banks at a margin of 170bps above three-month LIBOR, a saving of 50bps.
The Royal Bank of Scotland, HSBC, Barclays, Nationwide and Allied Irish Bank have refinanced their own existing facility. The original facility also included Lloyds, which has dropped out of the latest deal.
UK-based residential developer Grainger said the loan, which is due to mature in August 2020, will replace the current facility, which cost 220bps and was due in July 2016.
“We are very pleased with the result,” said Mark Greenwood, Grainger’s finance director. “I think it’s fair to say there’s reasonable competitive tension out there [in the lending market].”
The £580m refinancing is secured on the developer’s property assets and reflects a loan-to-value of about 45%. It reduces the company’s total cost of debt to around 4.6% from the 5.1% reported at the end of March. The average maturity of the company’s overall debt is now 5.8 years, up from the 4.4 years reported in March.
“We have been making considerable progress in diversifying our sources of funding and reducing the cost of our debt facilities,” said Greenwood.
“We will continue to review all other sources to ensure that we have the most competitive cost of debt to pursue our strategy of accelerating our push into the private rented sector.”
The £580m refinancing makes up 44% of Grainger’s total debt facilities of £1.33bn and is the company’s largest debt component. The developer is currently seeking to refinance a smaller amount due to mature in March next year.