HSBC has agreed an extension of two existing loans provided to subsidiaries of the UK’s Local Shopping REIT, which is subject to an ongoing wind-down strategy.
The borrower announced that the two cross-collateralised facilities, provided to vehicles NOS 4 Limited and NOS 6 Limited, have been extended by 20 months until 31 December 2019.
As part of the revised terms, the balance of the loans has been reduced by £7 million, bringing the total outstanding balance of the two loans to £43.5 million.
Further property assets valued at £1 million will be added to the existing security pool. The margin will be 2 percent over three-month Libor and an arrangement fee of 0.5 percent has been paid on the outstanding balance of the loans.
The loan-to-value ratio (LTV) default covenant applying to the loans is 70 percent, with the current LTV standing at 61 percent. The cash sweep covenant is 65 percent and the income cover ratio covenant is 120 percent.
In May 2016, Local Shopping REIT said that it will sell off its 387 UK assets with a view to divesting them by 2017.
The firm said that the extension of the loans will allow it to extend the timeline initially envisaged for the implementation of its current investment strategy, which had been approved in July 2013.
“This will permit the board to continue with the sale of the company’s property portfolio in an orderly manner and in a way which maximises shareholder value,” the firm added.