It refinances the existing £505m facility which carried an initial margin of 150bps and would have matured in April 2016.
BNP Paribas acted as coordinator. BNP Paribas, Bank of Tokyo-Mitsubishi UFJ, Barclays, HSBC, JP Morgan, Santander and Royal Bank of Scotland were mandated lead arrangers and bookrunners; Deutsche Bank and Chang Hwa Commercial Bank also participated.
Hammerson said the existing facility would be cancelled, resulting in a net reduction of £90m of undrawn facilities, helping to reduce future refinancing risk and commitment fees. Overall financing costs would be further reduced by the lower margin.
The loan has a maturity of five years which may be extended to a maximum of seven years on the European retail REIT’s request and on each bank’s approval for their participation. The terms of the facility include Hammerson’s standard unsecured financial covenants and it would be used for general corporate purposes.
“This new transaction is another milestone on our journey to further reduce Hammerson’s cost of debt,” said Timon Drakesmith, chief financial officer of Hammerson.
“Credit markets are strong and we appreciate the support of our bank group in arranging this attractive loan facility. We have structured the refinancing to achieve a blend of optimal liquidity, lower running cost and longer maturity.”
Hammerson’s available liquidity is £648m as reported at 31 December 2014 and £558m on a pro forma basis. The new loan brings the total committed financing available to Hammerson to approximately £2.8bn.
The current refinancing follows Hammerson’s issue last year of a €500m bond with the lowest-ever coupon by a UK property company, at 2%, 90 bps over the mid-swap rate. The eight-year bond was more than five times oversubscribed.