In a bid to lower its cost of borrowing and extend loan maturity, New York-listed REIT Global Net Lease has struck a £230 million (€256 million) refinancing deal with Lloyds Bank Commercial Banking, which puts into place new debt for its entire UK office portfolio.
“The refinancing of our UK assets has been a priority for us this year,” said GNL chief executive James Nelson, adding the new deal extends the debt maturity of the portfolio of 43 buildings from one to five years. CBRE Capital Advisors was hired to advise GNL on the transaction.
As part of the new deal, Lloyds has arranged a package which refinances £209 million of debt across 38 individual loans, each secured by single properties from the overall portfolio and provided by myriad banks. GNL had previously repaid fixed-rate debt on the other five properties between February and July.
In total, Lloyds has provided a facility comprising a mix of fixed- and floating-rate debt, priced at 1.975 percent over three-month Libor, reflecting an all-in weighted average interest rate of 3.2 percent.
In line with its aim to lead more large-scale, syndicated financing deals, Lloyds has sold down the majority portion of the facility. Through its capital markets team, the bank syndicated a £130 million participation to PGIM Real Estate, retaining the £100 million balance itself at the time of closing.
In addition, Lloyds acted as facility and security agent on the transaction and is sole hedge counterparty on a £180 million interest rate swap. The interest rate for 80 percent of the loan amount is fixed by a swap agreement to 3.299 percent.
Klaus Betz-Vais, head of institutional clients at Lloyds, explained the bank has a business relationship with GNL dating back to 2015 and has now become the REIT’s key UK relationship bank. “By working closely with our client, we were able to deliver a debt product that met both their flexibility and timing requirements,” he added.
GNL’s UK portfolio consists of large, single-let buildings, let to tenants including Amec Foster Wheeler, Harper Collins and Fujitsu on long leases.
“The process demonstrated strong appetite from lenders, both domestic and international to provide borrowings for a well-diversified quality portfolio of this kind,” added Andy Tallon, senior director, Ireland & UK debt and structured finance, at CBRE Capital Advisors.