Hibernia secures €400m at 2% from Irish syndicate

Irish REIT Hibernia has agreed a £400m revolving credit facility at close to 2% cost with three banks.

Bank of Ireland, Ulster Bank and Barclays are participating in the loan which Hibernia will use to replace an existing €100m RCF, to fund projects and make new acquisitions.

Tom Edwards-Moss, the company’s chief financial officer, said “We’ve deployed about €600m of capital so far into Dublin property and we’re are continuing to see a large number of opportunities. From a development funding point of view and for new acquisitions, it helps to have the debt in place. It means we can move very quickly.

“The second thing is, we’re a listed company with a low LTV policy – we won’t go above a 40% loan to value position. As a result of that, the banks consider us relatively low risk and are therefore prepared to lend to us at attractive, competitive rates. The margin on our facility is just north of 2%, and we can buy on equivalent yields of at least 5%. So that’s why we’ve moved ahead with this now and think it’s attractive.”

Hibernia was launched on the Irish stock market in December 2013 to capitalise on the recovering property market and specialises in investing in Dublin via acquisitions, development and buying secured loans.

Bank of Ireland Corporate Banking was the lender of the €100m facility due to mature in August 2017 which is being replaced, and led the new syndicate as agent and joint bookrunner and arranger, increasing its participation to €190m.

Barclays took €140m and Ulster Bank, €70m.

The new loan is not secured against assets, but is secured against a corporate level debenture which was put in place for the previous RCF and has been rolled forward.

Edwards-Moss said his preference would been “to have entirely unsecured debt in place, and over time we hope that’s something Hibernia will be able to move towards. What’s most important is under this structure, within broad parameters, we have flexibility to deploy the funds and make investment decisions without having to go back to the banks every time.

“The debenture gives the banks some comfort: they wanted to have at least a floating security charge.”

The debt markets have recovered in Ireland in last 12-18 months with more lenders looking to do business there. Hibernia talked to around 12 or 13  banks initially about the new facility, including UK and continental as well as the large Irish lending banks.

Reporting strong interim results this week, the Irish REIT said it had €115m of net cash on balance sheet. Edwards-Moss said the company has near term commitments of about €150m, “So we know we’ll be at a net debt position of €50m euros pretty quickly. Our old facility wouldn’t have given us much headroom for other things and the new RCFgives us €350m of headroom.”

He said the company is likely to hedge at least 50% of drawn funds, with a likely all-in cost below 2.5%.