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Primary Health Properties secures financing

The UK REIT has renewed a £75m loan from Aviva and sourced a £30m revolving credit facility from Lloyds.

UK healthcare REIT Primary Health Properties has signed a £75 million (€84.3 million) refinancing facility with Aviva and a £30 million revolving credit facility with Lloyds Bank.

The UK insurer agreed to renew the £75 million secured loan facility for just under 11 years to November 2028 at a fixed interest rate of 3.10 percent per year.

The existing Aviva facility, due to mature in November 2018, carried a fixed 4 percent interest rate and the renewal will result in interest savings of £675,000 per year, said the UK REIT.

The new facility is secured against 31 modern purpose-built medical centres. The portfolio provides around 400,000 square feet of accommodation let to NHS and pharmacy tenants. Following this deal, Aviva remains PHP’s largest individual lender, with a total of £236 million of secured debt facilities.

Lloyds’ new £30 million secured revolving credit facility is for an initial three-year period. The loan has the option to be extended by two further years, at rates ranging from 155 basis points to 175bps over Libor, depending on utilisation.

The Lloyds facility may be drawn in either sterling or euros at PHP’s option, the REIT said. It added that the facility will be used to fund further acquisitions both in the UK and Ireland.

These debt transactions extend the average weighted maturity of PHP’s debt facilities to 6.3 years, from 5.8 years at 30 June 2017. The average cost of debt on its facilities drawn has been reduced to 4.09 percent, PHP said.

“We will use the funds to progress our long-term strategy of growing PHP’s portfolio through the acquisition of well-priced, modern primary healthcare assets that will provide strong income returns,” said Harry Hyman, managing director of Primary Health Properties.