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Lloyds and Scottish Widows arrange £40m loan for LXi REIT

The debt facility has been arranged at a fixed all-in rate of 2.85% per year.

Lloyds Bank Commercial Banking, through its partnership with group insurer Scottish Widows, has provided a £40 million loan (€45.27 million) to UK real estate investment trust LXi REIT.

The 11-and-a-half-year loan has been arranged at a fixed all-in rate of 2.85 percent per year. The REIT said the cost of the facility is 311 basis points lower than its average net initial property yield of 6.01 percent.

The facility reflects a loan-to-value ratio of 32 percent, when combined with a previous debt facility of £55 million also secured from Lloyds and Scottish Widows. The new loan is repayable on 3 July 2029, the same date as the expiry of the firm’s existing £55 million loan.

LXi REIT has fully deployed its net equity and further acquisitions are expected to fully absorb the debt finance under the new facility in the next few weeks, the firm said.

“This [loan] provides the company with a second, long-dated senior financing package at a very attractive fixed rate, which is highly accretive to the company’s dividend yield,” said Simon Lee, partner at LXi REIT.

In March 2015, Real Estate Capital revealed that insurer Scottish Widows would target fixed-rate, long-term commercial mortgages through a new lending structure with Lloyds Bank. Both are part of Lloyds Banking Group.