Lloyds Bank Commercial Banking, through its partnership with group insurer Scottish Widows, has provided a £55 million loan to UK real estate investment trust LXi REIT.
The 12-year loan has been arranged at a fixed all-in rate of 2.93 percent a year, and reflects a loan-to-value ratio of 30 percent. The REIT said the cost of the facility is just under 300 basis points lower than its average net initial property yield of 5.9 percent.
The loan will allow LXi REIT to finance the acquisition of additional assets, comprising both forward-funded and built properties. The company has already deployed 85 percent of its net equity.
The facility is secured against built and forward-funded assets acquired by the company using the equity raised by February 2017.
LXi REIT aims to maintain aggregate borrowings with a medium-term target of 30 percent of its gross assets. The maximum level of combined borrowings would be 35 percent of gross assets.
The loan provides LXi REIT with “a long-dated senior financing package at a very low fixed rate and offers the company substantial operational flexibility”, Simon Lee, partner of LXi REIT Advisors Limited, said.
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.